Illustrate what is the money multiplier

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Reference no: EM1345981

Suppose the following data apply:
Total bank Reserves: $6 billion
Total bank deposits: $100 billion
Cash held by public: $10 Billion
Bonds held by public: $220 Billion
Stocks held by public: $140 Billion
Gross domestic product: $5 trillion
Interest rate: 6 percent
Required reserve ratio: 0.05

A. How large is the money supply?

B. How much excess reserves are there?

c. Illustrate what is the money multiplier?

d. Illustrate what is the available lending capacity?"

Reference no: EM1345981

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