ASSIGNMENT

Assignment



Assignment

Question 1

Money Multiplier

M=1/R=1/1/2=2

Reserve Ratio

R=(1+.5)/2-.5=25%

Value of Bank Notes

56*9/10=$50.4billion

Value of Bank Notes in Circulation

56/13=$4.3billion

Question 2

Parallel Loanable Funds Market

Currency Exchange Diagram

In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits (depositors' easily accessed assets on the books of financial institutions).

M0

Laura has ten US $100 bills, representing $1000 in the M0 supply for the United States. (MB = $1000, M0 = $1000, M1 = $1000, M2 = $1000)

Laura burns one of ...