Based on the information in the table, if the public had not decided to hold more currency in 1932, but the actions of the Federal Reserve and the banks remained the same, the money supply at the end of 1932 would have been:
A)$33.8 billion
B)$34.2 billion
C)$35.9 billion
D)$36.1 billion

Question

Based on the information in the table, if the public had not decided to hold more currency in 1932, but the actions of the Federal Reserve and the banks remained the same, the money supply at the end of 1932 would have been: 
A)$33.8 billion 
B)$34.2 billion 
C)$35.9 billion 
D)$36.1 billion

Quizplus · Accepted Answer

If the public held $4.59 billion in currency rather than $4.82 billion, the additional cash would have served as bank reserves, creating an additional $0.23 billion/0.109 = $2.11 billion in deposits. The difference between these deposits and the currency (either of which would be part of the money supply)is $2.11 billion - $0.23 billion = $1.88 billion. This is the amount by which the money supply would have been higher in 1932.

Based on the Information in the Table, If the Public