The desired reserve ratio is 2 percent of deposits, and the currency drain ratio is 4 percent of deposits. The central bank makes an open market purchase of $2 million of securities. Calculate the change in the quantity of money. How much of the new money is currency and how much is bank deposits? >>> Answer to 2 decimal places. The quantity of money changes by $ million.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter25: Money, Banking, And The Federal Reserve System
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The desired reserve ratio is 2 percent of deposits, and the currency drain ratio is 4 percent of deposits.
The central bank makes an open market purchase of $2 million of securities.
Calculate the change in the quantity of money. How much of the new money is currency and how much is bank deposits?
>>> Answer to 2 decimal places.
The quantity of money changes by $ million.
Transcribed Image Text:The desired reserve ratio is 2 percent of deposits, and the currency drain ratio is 4 percent of deposits. The central bank makes an open market purchase of $2 million of securities. Calculate the change in the quantity of money. How much of the new money is currency and how much is bank deposits? >>> Answer to 2 decimal places. The quantity of money changes by $ million.
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