What is the value of the money multiplier

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Reference no: EM132636315

Assignment: Provide numerical answers for the next 7 questions (@3 pts. for 18 + 3 bonus).

Round off, if necessary, to the nearest whole dollar.

Use a comma as a separator for values in the thousands

Use a "+" or "-" for all of your answers.

Use a "$" for dollar value answers.

Good types of answers: +$444 or -$3,200 or -2.34 rounded to two decimal places.

Bad types of answers: +444.25 (no $ and not rounded off to the nearest whole dollar) or $3200 (no + or - and no comma) or 2.3 (if to be rounded to 2 places)

1. If a bank has undesired excess reserves of $300, and if rr=20%, e=15% and c=20%, what is the value of the money multiplier? [Provide to two decimal places.]

2. If a bank has deposits of $4,000 and reserves of $1000 and if rr=25%, e=15% and c=10%, then what is the bank's level of undesired excess reserves? Be clear about whether this is positive or negative.

3. If a bank has undesired excess reserves of $250, and if rr=15%, e=15% and c=10%, then to restore equilibrium by how much will the money supply (M1) change? Be clear about whether this is a positive or negative change.

4. If a bank has undesired excess reserves of -$450 and where e=15%, c=20%, and m*=4.8, to restore equilibrium by how much will the money supply (M1) change? Be clear about whether this is a positive or negative change.

5. If a bank has $18,500 in deposits, and $4,300 in reserves, and if rr=15%, e=5% and c=20%, how much undesired excess reserves does the bank have? Be clear about whether this is positive or negative.

6. If a bank has $30,000 in deposits, and $3,250 in reserves, and if rr=20%, e=2.5% and c=15%, how much currency is in circulation? Be clear about whether this is positive or negative.

Bonus 7. If a bank has undesired excess reserves of $830 and where e=7%, c=8%, and m*=4.3, what is the value of the required reserve ratio (rr)? Express in % terms, use that symbol, rounded to one decimal place. [So, 15.6% is ok, but 15% is not, nor is .156]

Reference no: EM132636315

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