What is the value of the money multiplier

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Reference no: EM131399304

Suppose that the velocity of circulation of money is V = 5 and the nominal GDP of the nation is
$200 billion.

(a) What is the quantity of money demanded by the nation?

(b) By how much will the quantity of money demanded rise if the nation's nominal GDP rises to $220 billion?

4. Suppose that the domestic credit created by the nation's monetary authorities is $8 billion and the nation's international reserves are $2 billion, and that the legal reserve requirement for the nation's commercial banking system is 25 percent.

(a) How much is the monetary base of the nation?

(b) What is the value of the money multiplier?

Reference no: EM131399304

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