Calculate level of monetary base in the us banking system

Assignment Help Microeconomics

Reference no: EM131777982

Question: Suppose that the banking system in the United States could be described by the following set of equations:

Reserve requirement ratio (rr) = 0.09

Currency in circulation (C) = $565 billion

Total Deposits (D) = $958 billion

Excess Reserves (ER) = $ 60 billion

(a) Given the above information calculate the level of the monetary base (MB) in the U.S. banking system.

(b) Given the above information what is the money multiplier in the U.S. banking system.

(c) Suppose that the monetary base increases by $100,000. Based on your answer in Part (b) by how much will the money supply change in the United States.

(d) Suppose the amount of currency in circulation increases to $600 billion (C = $600 billion) while all other variables remain constant. Calculate the new money multiplier.

(e) Give the economic intuition on why an increase in currency held in circulation would reduce the money supply in the U.S. economy.

Reference no: EM131777982

Questions Cloud

Calculate as an ear not an apr : Calculate as an EAR, not an APR. Enter your answer as a percent rounded to two decimals - constant perpetuity with the first payment taking place today

What is her qualified student loan interest deduction : In 2010 sally morris, a single taxpayer, pays $3000 of interest on qualified student loans. What is her qualified student loan interest deduction in 2010

How the addition of pounds of plastic will affect its mrp : A producer wishes to determine how the addition of pounds of plastic will affect its MRP and profits. See the table below, and answer each of the questions.

Focused on leaders and followers requires : Discussion Board is focused on “Leaders and Followers” requires you to focus on a contemporary leader.

Calculate level of monetary base in the us banking system : Suppose that the banking system in the United States could be described by the following set of equations.

What is carlos tax expense deduction for current tax year : Carlos Diego paid the following expenses during the current tax year, What is Carlos's tax expense deduction for the current tax year

List any your references you used to construct your table : List any your references you used to construct your table following the essay in the appropriate APA format. Use at least three references.

Cost of care-increasing efficiency with goal of sustaining : the cost of care or increasing efficiency with the goal of sustaining the organization in a changing and challenging environment?

Poems expreses the passions : The morning is full, and So that you will hear me by Neruda. Explain how the use of the imagery in the poems expreses the passions that Neruda

User Account

All Pages