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Money Multiplier Economics Equation Help!

 
 
Reply Wed 11 May, 2016 08:53 am
So I need help solving a two part question, I believe I solved the 1st part correctly but need help with the effects of the 2nd part... Here it goes:
Suppose the following conditions exist in the economy...

Demand deposits & other checkable depossits = $2,000 billion.
Currency held by the public = $500 billion.

The Fed Reserve requires 3% of deposits below $50 million must be held as reserves while reserve requirement on deposits above $50 million is 10%. Initially $600 billion is subject to 3% reserve requirement and the remaining $1,400 billion is subject to 10% reserve requirement.

Total reserves = $250 billion.

A) Calculate the initial values of the variables listed

B) Suppose the public increases its currency holding from $500 billion to $600 billion by withdrawing an addition $100 billion from their demand deposit accounts. Assume that the withdrawals reduce demand deposits subject to the 3% reserve requirement by $40 billion and the deposits subject to the 10% reserve requirement by $60 billion. Calculate the effects of this change on the variables.


Answers I think I know are correct, but feel free to double check...:
A)
Currency Ratio (C/D)= .25
Total Reserves= $250 billion
Required Reserves= $158 billion
Excess Reserves= $92 billion
Required Reserves Ratio= .079
Excess Reserves Ratio= .046
Money Multiplier= 3.3333...
Monetary Base= $750 billion
Money Supply= $2,500 billion

B)
Currency Ratio (C/D)= .316
Total Reserves= ???
Required Reserves= $150.8 billion
Excess Reserves= ???
Required Reserves Ratio= .079
Excess Reserves Ratio= ???
Money Multiplier= ???
Monetary Base= ???

Money Supply= $2,500 billion
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