In the economy of Briskland, the commercial banks have deposits of $500 billion. Their reserves are $50 billion, 80 percent of which is in deposits with the Central Bank. There is $20 billion in Central Bank notes outside the banks, and there are no coins.
a) What is the monetary base?
b) If all the deposits are money, what is the total quantity of money?
c) What is the banks' reserve ratio?
d) What is the currency drain as a percentage of the quantity of deposits?

Question

Quizplus · Accepted Answer

The Answer of In the economy of Briskland, the commercial banks have deposits of $500 billion. Their reserves are $50 billion, 80 percent of which is in deposits with the Central Bank. There is $20 billion in Central Bank notes outside the banks, and there are no coins.
a) What is the monetary base?
b) If all the deposits are money, what is the total quantity of money?
c) What is the banks' reserve ratio?
d) What is the currency drain as a percentage of the quantity of deposits?

In the Economy of Briskland, the Commercial Banks Have Deposits