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Macroeconomics 12th Edition by Michael Parkin
Edition 12ISBN: 978-0133872279Macroeconomics 12th Edition by Michael Parkin
Edition 12ISBN: 978-0133872279 Exercise 9
In Problem 1, the banks have no excess reserves. Suppose that the central bank in Nocoin increases bank reserves by $0.5 billion.
a. Explain what happens to the quantity of money and why the change in the quantity of money is not equal to the change in the monetary base.
b. Calculate the money multiplier.
Problem 1
In the economy of Nocoin, bank deposits are $300 billion. Bank reserves are $15 billion, of which two thirds are deposits with the central bank. Households and firms hold $30 billion in bank notes. There are no coins. Calculate
a. The monetary base and quantity of money.
b. The banks' desired reserve ratio and the currency drain ratio (as percentages).
a. Explain what happens to the quantity of money and why the change in the quantity of money is not equal to the change in the monetary base.
b. Calculate the money multiplier.
Problem 1
In the economy of Nocoin, bank deposits are $300 billion. Bank reserves are $15 billion, of which two thirds are deposits with the central bank. Households and firms hold $30 billion in bank notes. There are no coins. Calculate
a. The monetary base and quantity of money.
b. The banks' desired reserve ratio and the currency drain ratio (as percentages).
Explanation
Verified
Verified
a)
Monetary base is computed as the sum ...
Macroeconomics 12th Edition by Michael Parkin
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