Answer to Question #70971 in Macroeconomics for Joel

Question #70971
Now consider the same economy, and the central bank sells $8 billion worth of government bonds to local banks. State the likely effects on the money supply under reserve requirements of: a) 10%. b) 15%. c) 20%. d) 25%.
1
Expert's answer
2017-11-08T12:58:07-0500
a) 10%: the money supply will decrease by 8/0.1 = $80 billion.
b) 15%: the money supply will decrease by 8/0.15 = $53.33 billion.
c) 20%: the money supply will decrease by 8/0.2 = $40 billion.
d) 25%: the money supply will decrease by 8/0.25 = $32 billion.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS
paypal