Economy monetary base by combining actual-potential reserves

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Reference no: EM131159471

The questions on this homework deal with an economy called Economica. This economy contains a total of two banks; I've included partial balance sheet information for each below. To avoid each question becoming huge, I won't repeat this information for future questions.

Bank One:

$1,500 cash within the bank

$3,000 Deposit in the Fed

$6,000 equity (capital)

$12,000 saving deposits

$16,000 checking deposits (DD)

Bank Two:

$2,000 cash within the bank

$3,500 Deposit in the Fed

$8,000 equity (capital)

$15,000 savings deposits

$20,000 checking deposits (DD)

Residents in this economy hold $6,000 in cash. The reserve requirement ratio is the same as we've used on all graded assignments.

You can safely assume that all banks must keep 10% of DD as required reserves.

Calculate this economy's monetary base by combining actual and potential reserves. Note that the base is an economy-wide variable. Carefully follow all numeric instructions.

Reference no: EM131159471

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