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Calculate the required reserves

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A) Calculate the currency ratio (c), the excess reserve ratio (e), and the money multiplier (m) for the following numbers:

i. Required reserve ratio (rr) = .08

ii. Deposits (D) = $600 billion

iii. Currency in circulation (C) = $180 billion

iv. Excess Reserves (ER) = $24 billion

B) Calculate the required reserves (RR), total reserves (R), and the monetary base (MB)

C) Calculate the new money multiplier and money supply assuming that the Fed lowers the required reserve ratio on checkable deposits to .06 and does nothing to the monetary base. Assume that the deposit ratios remain unchanged.

D) Calculate the new level of deposits and currency in circulation.

E) Calculate the new level of required reserves (RR) and excess reserves (ER)

Reference no: EM133077206

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