Calculate new level of deposits and currency in circulation

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Reference no: EM13832657

Calculate the currency-to-deposit ratio (cr), and the money multiplier (m) given the following values:

rr = .20

C = $320

D= 1000

a. Calculate the currency-to-deposit ratio (cr), and the money multiplier (m) given the above values

b. Calculate total required reserves (RR), total actual reserves (AR) and the monetary base (MB).

c. Now assume the FED lowers the required reserve ratio to 0.10. Calculate the new money multiplier (mm’) and the new money supply (M1).

d. Calculate the new level of deposits (D’) and currency in circulation (C).

e. Calculate the new level of required reserves (RR’) and excess reserves (ER’).

Please note that the money multipliers are (m') = 2.53 and (mm') = 3.14. Do not use 1 / rr for the mm.

Reference no: EM13832657

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