Calculate the new monetary base

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A. If the required reserve ratio is 15 percent, currency in circulation is $400 billion, checkable deposits are $1000 billion, and excess reserves total $1 billion, then the M1 money multiplier is

B.Assume that the required reserve ratio, the currency to deposits , and the reserves to deposits remain constant, but there is a open market purchase of $1500 billion. Calculate the new monetary base.

Calculate and show how you resulted in your answers.

Reference no: EM132505351

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