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The economy of Elmendyn contains 2,000 $1 bills. a. If people hold all money as currency, what is the quantity of money? b. If people hold all money as demand deposits and banks maintain 100 percent reserves, what is the quantity of money? c. If people hold equal amounts of currency and demand deposits and banks maintain 100 percent reserves, what is the quantity of money? d. If people hold all money as demand deposits and banks maintain a reserve ratio of 10 percent, what is the quantity of money? e. If people hold equal amounts of currency and demand deposits and banks maintain a reserve ratio of 10 percent, what is the quantity of money?

BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985
BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985

Solutions

Chapter
Section
Chapter 11, Problem 12PA
Textbook Problem

The economy of Elmendyn contains 2,000 $1 bills.

a. If people hold all money as currency, what is the quantity of money?

b. If people hold all money as demand deposits and banks maintain 100 percent reserves, what is the quantity of money?

c. If people hold equal amounts of currency and demand deposits and banks maintain 100 percent reserves, what is the quantity of money?

d. If people hold all money as demand deposits and banks maintain a reserve ratio of 10 percent, what is the quantity of money?

e. If people hold equal amounts of currency and demand deposits and banks maintain a reserve ratio of 10 percent, what is the quantity of money?

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