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Author Question: Suppose the required reserve ratio is 8, excess reserve-to-deposit ratio is 2, and the ... (Read 31 times)

melly21297

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on: Jun 30, 2018
Suppose the required reserve ratio is 8, excess reserve-to-deposit ratio is 2, and the currency-to-deposit ratio is 10. What is the value of the money multiplier?
 
  What will be an ideal response?

Question 2

Given the values in the table above, consumption is ________ when equilibrium output is 15.
 
  A) 12.3
  B) 11.86
  C) 12.05
  D) 11.55
  E) none of the above


vkodali

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The money multiplier = (1 + 0.1 )/(.08 + .02 + .1 ) = 5.5

Answer to Question 2

B


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