Solved

The Stock of High-Powered Money in the Economy Is $80

Question 35

Multiple Choice

The stock of high-powered money in the economy is $80 billion.The bank reserve-holding ratio is 0.12 and the public wishes to hold 10% of its deposits as cash.The money supply will be approximately


A) $363 billion assuming the 80 billion of high-powered money is held by banks.
B) $400 billion assuming the 80 billion of high-powered money is held by the Fed or in bank vaults.
C) $327 billion assuming the 80 billion of high-powered money is not held by the Fed or in bank vaults.
D) $425 billion assuming the 80 billion of high-powered money is held by banks.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents