7. Suppose that the required reserve ratio is 9%, currency in circulation is 620 billion, the amount of checkable deposi

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7 Suppose That The Required Reserve Ratio Is 9 Currency In Circulation Is 620 Billion The Amount Of Checkable Deposi 1 (24.74 KiB) Viewed 33 times

7. Suppose that the required reserve ratio is 9%, currency in circulation is 620 billion, the amount of checkable deposits is 950 billion, and excess reserves are 15 billion. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money multiplier. (10 points) b. Suppose the central bank conducts an unusually large open market purchase of bonds held by banks of 1,300 billion due to a sharp contraction in the economy. Assuming the ratios you calculated in part (a) remain the same, predict the effect on the money supply. (10 points)