Consider an economy with the following data on its banking system: currency outside banks (CU)= $56 billion,bank reserves (RES)= $42 billion,and total deposits (DEP)= $600 billion.
a.How much is the monetary base?
b.How much is the money supply?
c.What is the reserve-deposit ratio?
d.What is the currency-deposit ratio?
e.What is the money multiplier?
f.If the monetary base rises by $2 billion,by how much will the money supply increase?
Correct Answer:
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b.$656...
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