The stock of high-powered money in the economy is $80 billion. The bank reserve-holding ratio is 0.12 and the public wishes to hold 10% of its deposits as cash. The money supply will be approximately
A) $363 billion assuming the 80 billion of high-powered money is held by banks.
B) $400 billion assuming the 80 billion of high-powered money is held by the Fed or in bank vaults.
C) $327 billion assuming the 80 billion of high-powered money is not held by the Fed or in bank vaults.
D) $425 billion assuming the 80 billion of high-powered money is held by banks.
B
You might also like to view...
If the government taxes producers that create pollution, the government's policy
A) allows the producers to pollute more by increasing their costs. B) results in less production because the producers' costs have risen. C) eliminates pollution entirely by shifting the supply curve leftward. D) allows the firms to pass along higher costs but doesn't cut pollution. E) forbids the firms from passing along higher costs.
To achieve the efficient amount of use of a common resource, the use should be such that ________ equals ________
A) marginal social cost; marginal private cost B) marginal social cost; marginal social benefit C) marginal social benefit; marginal private cost D) marginal private cost; marginal private benefit
Which of the following statements is a positive economic statement?
A) The number of families living in poverty in the United States is too high. B) One in every five children in the United States is living in poverty. C) Government programs to help the poor are just making problems worse. D) Increases in poverty rates signify a deterioration of the U.S. economy.
The required reserve ratio in an economy is 16 percent. If two banks, Bank A and Bank B, receive deposits of $50,000 and $75,000 . respectively, then the value of the money multiplier in the economy is: a. 10.00. b. 12.50. c. 6.25
d. 8.00.