Supply of Money Suppose the monetary base is GHS 800 billion, the current reserve-deposit ratio is 0.1 and the currency -deposit ratio is 0.7. W Calculate the money multiplier and the money supply
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- The initial deposit are 2920 and the money multiplier are 0.15 find the total depositsQUESTION 12 The dollar depreciates by 20 percent against the Euro. Powell should O Increase the monetary base by 20 percent Reduce the monetary base by 18 percent Reduce the moriey 22 percent. Do nothing Not enough information to answer this question QUESTION 13 Banks become more optimistic due to an improvement in the economy. The money multiplier increases by 10 percent. Powell should O Increase the monetary base by 20 percent O Reduce the monetary base by 8 percent O Reduce the money 22 percent O Do nothing O None ofthe above QUESTION 14 President Biden increases the government deficit to 10 percent of GDP. Powell should O Increase the money supply by 10 percent O. Reduce the money supply by 10 percent O Reduce the money supply by 12 percent O Do nothing O We do not have enough information to answer.Given a money base of 500 million, RRR of 5% and change in reserves for the banking system of 10 thousand. What is the change in deposit? Select one: a. $50, 000 b. $200, 000 c. None of the above d. $100, 000 If the government wants to increase the money supply they could: Select one: a. Increase the reserve requirement ratio b. Increase the discount rate c. All of the above d. Buy bonds In a monetary union, individual countries cannot do which of the following: Select one: a. Set their own interest rates b. A and C c. Change their own exchange rates d. Set their own tax rates
- in the economy of Nocoin the banks have deposits of $400 bilion Their reserves are $80 billion, two thirds of which is in deposits with the central bank Households and frms hold $20 billion in banknotes (dollar bills). There are no coins! Calculate the banks' desired reserve ratio and the currency drain ratio (as percentages) The banks' desired reserve ratio ispercent The currency drain ratio is percentBanks in New Transylvania have a desired reserve ratio of 10 percent of deposits and noexcess reserves. The currency drain ratio is 50 percent of deposits. Now suppose that thecentral bank increases the monetary base by $900 billion.v. Calculate money multiplier in this example and what is the final increase in the quantity of moneyThe Monetary System – Work It Out: Question 1 In the nation of Orcam, people hold $10000 of currency and $50000 of demand deposits in the only bank, Orcbank. The reserve-deposit ratio is 0.1. Round answers to two places after the decimal when necessary. a. Calculate the money supply, the money multiplier, and the monetary base. money supply: $ 60000 5.50 money multiplier: Incorrect 5.50 monetary base: $ Incorrect
- A 1 Consider the following monetary data: 2000 2008 Monetary base ($bn) 8.5 8.7 Reserve deposit ratio (%) 20 15 Currency deposit ratio (%) 13. 23 a. Calculate the change in the money supply between 2000-2008 if the currency deposit ratio changes as shown, but the reserve deposit ratio stays constant. b. Calculate the change in the money supply between 2000-2008 if the reserve deposit ratio changes as shown, but the currency deposit ratio stays constant. c. Which of the two changes is more responsible for the overall change in the money supply from 2000-2008? Why?15. All else equal, a decrease in reserve requirements will cause a.state and local government expenditures to fall.b.inflation expectations to fall.c.an increase in the Fed Funds rate.d.excess reserves to increase.e.All of the above will occur. 16. An increase in depository institutions' reserves will causea.the Fed Funds rate to rise.b.planned inventory investment to fall.c.depository institutions to lend more freely.d.foreign investors to buy more T-Bills.e.None of the above.Isabella takes $100 of currency from her wallet anddeposits it into her checking account. If the bankadds the entire $100 to reserves, the money supply_________, but if the bank lends out some of the$100, the money supply _________.a. increases; increases even moreb. increases; increases by lessc. is unchanged; increasesd. decreases; decreases by less
- Explain whether each of the following eventsincreases or decreases the money supply.a. The Fed buys bonds in open-market operations.b. The Fed reduces the reserve requirement.c. The Fed increases the interest rate it pays onreserves.d. Citibank repays a loan it had previously takenfrom the Fed.e. After a rash of pickpocketing, people decide tohold less currency.f. Fearful of bank runs, bankers decide to hold moreexcess reserves.g. The FOMC increases its target for the federalfunds rate.Assume that the commercial banking system has 500TL of deposits and the banks hold no excess reserves. The required reserve ratio is 10%. If the Central Bank sells T-bills in the amount of 25TL and banks lend to the maximum extent permitted, assuming no cash drain, loans: a.decrease by 225TL b.decreases by 20TL c.decrease by 100TL d.increase by 25TL e.decrease by 25Write the equation and explaina. M2 and Broad Money