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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
I have made it through all of my other homework, and am totally stuck on these two questions. Using an Excel Spreadsheet answer the following problems: Problem 8 The BASIC financial system has a required reserves ratio of 15 percent; initial excess reserves are $5 million, cash held by the public is $1 millioni and is expected to stay at that level, and no other leakagges or adjustments are in the system. a. What would be the money multiplier and the maximum amount of checkable deposits? b. What would be the money supply amount in the sytem after deposit expansion? Problem 10 The COMPLEX financial system has these relationships: The ratio of reserves total deposits is 12 percent, and the ratio of noncheckable deposits to checkable deposits is 40 percent. In addition, currency held by the nonbank public amounts to 15 percent of checkable deposits. The ratio of government deposits to checkable deposits is 8 percent, and the monetary base is $300 million. a. Determine the size of the M1 money multiplier and the size of the money supply. b. If the ratio of currency in circulation to checkable deposits were to drop to 13 percent while the other ratios remained the same, what would be the impact on the money supply? c. If the ratio of government deposits to checkable deposits increases to 10 percent while the other ratios remained the same, what would be the impact on the money supply? d. What would happen to the money suply if the reserve requirement increased to 14 percent while noncheckable deposits to checkable deposits fell to 35 percent? Assume the other ratios remain as originally stated
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