What would be the impact on the money supply

Assignment Help Finance Basics

Reference no: EM13265378

The COMPLEX financial system has these relationships: the ratio of reserves to total deposits is 12 percent. and the ratio of noncheckable deposits to checkable deposits is 40 percent. In addition, currency held by the nonbank public amounts to 15 percent of checkable deposits. The ratio of government deposits to checkable deposits is 8 percent, and the monetary base is $300 million.

A. Determine the size of the M1 money mulitplier and the size of the money supply.

B. If the ratio of currency in circulation to checkable deposits were to drop to 13 percent while the other ratios remained the same, what would be the impact on the money supply?

C. If the ratio of government deposits to checkable deposits increases to 10 percent while the other ratios remained the same, what would be the impact on the money supply?

D. What would happen to the money supply if the reserve requirement increased to 14 percent while noncheckable deposits to checkable deposits fell to 35 percent? Assume the other ratios remain as orgiginally stated.

Reference no: EM13265378

Questions Cloud

Research some best practices for disaster recovery : A disaster recovery plan is a set of policies and procedures designed to mitigate the damage of a disaster. Research some best practices for Disaster recovery. Discuss your findings.

Proceed with development of the product : Should the company proceed with development of the product if the discount rate is 20 percent? Why? Does the decision to proceed with development of the product change if the discount rate is 15 percent? Why?

Obtain the period of the oscillation : A 1.7kg block oscillates on a spring with spring constant 16N/m . At t = 0 s the block is 20 cm to the right of the equilibrium position, obtain the period of the oscillation.

What will happen to the price of the bond : What will happen to the value/price of the bond as it approaches maturity?

What would be the impact on the money supply : What would happen to the money supply if the reserve requirement increased to 14 percent while noncheckable deposits to checkable deposits fell to 35 percent? Assume the other ratios remain as orgiginally stated.

Find and plot straight-line approximations to the amplitude : a) Find and plot the straight-line approximations to the amplitude and phase response bode plots b) sketch the approximate amplitude-response bode plot od this system using the straight-line approximation and approximate amplitude values at the br..

What is the blocks oscillation frequency : A 180g block hangs from a spring with spring constant 13N/m . At t=0s the block is 13cm below the equilibrium point, What is the block's oscillation frequency

What is dannys average daily collection : What is the relationship between the terms that Danny is giving and his average daily collection?

Describe the emergence of modern muslim nation-states : Describe the emergence of modern Muslim nation-states out of the early modern Muslim world - discuss the politics and the agendas of colonial powers, in particular France and Britain, in dividing up the Ottoman Empire to carve out new political ent..

User Account

All Pages