Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 28, Problem 4TY
a.
To determine
Impact of $100 withdrawal on money supply.
b.
To determine
Impact of depositing $100 into the bank on money supply.
c.
To determine
Impact of $500 withdrawal from one bank and depositing it in another.
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a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent. Explain in details.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? Explain in details. c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not? Explain in details.
if the required reserve ratio is 2 percent then the simple deposit multiplier is
Enter a whole number
What will be the money multiplier when the legal reserve ratio is stated as = 76%
Chapter 28 Solutions
Economics: Principles & Policy
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