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Assume the monetary base is $100, the currency-deposit ratio is 0.5, and the reserve- deposit ratio is 0.1.
a. Calculate the money multiplier and the money supply.
b. Suppose the currency-deposit ratio rises to 1.0. If the Fed holds the monetary base constant, what happens to the money multiplier and the money supply?
c. Suppose the Fed wants to keep the money supply constant at the level found in part (a). How must it adjust the monetary base when the currency-deposit ratio rises?
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Assume NEWC has an investment opportunity (similar to the air bag opportunity in Other People's Money).The firm can spend a product that will be sold in packets or units of twenty. Assume CF equals net income available to common stockholders plus dep..
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Bob and Lisa are both married, working adults. They both plan for retirement and consider the $2,000 annual contribution a must. First, consider Lisa’s savings. She began working at age 20 and began making an annual contribution of $2,000 at the firs..
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