The money multiplier (m) is calculated using the formula:

m = 1 + cr / rr + cr

where cr is the currency-deposit ratio and rr is the reserve-deposit ratio.

Given that cr = 0.6 and rr = 0.2, we can substitute these values into the formula:

m = 1 + 0.6 / 0.2 + 0.6 = 1 + 3 = 4

Therefore, the money multiplier is 4.

The money supply (M) is calculated by multiplying the money multiplier (m) by the monetary base (B). Given that B = $1000, we can substitute these values into the formula:

M = m * B = 4 * $1000 = $4000

Therefore, the money supply is $4000.

However, none of the options provided (A, B, C, D) match these calculations. There might be a mistake in the question or the provided options.

Question

The money multiplier (m) is calculated using the formula:

m = 1 + cr / rr + cr

where cr is the currency-deposit ratio and rr is the reserve-deposit ratio.

Given that cr = 0.6 and rr = 0.2, we can substitute these values into the formula:

m = 1 + 0.6 / 0.2 + 0.6 = 1 + 3 = 4

Therefore, the money multiplier is 4.

The money supply (M) is calculated by multiplying the money multiplier (m) by the monetary base (B). Given that B = $1000, we can substitute these values into the formula:

M = m * B = 4 * $1000 = $4000

Therefore, the money supply is $4000.

However, none of the options provided (A, B, C, D) match these calculations. There might be a mistake in the question or the provided options.

Knowee AI · Accepted Answer

The money multiplier (m) is calculated using the formula:

m = 1 + cr / rr + cr

where cr is the currency-deposit ratio and rr is the reserve-deposit ratio.

Given that cr = 0.6 and rr = 0.2, we can substitute these values into the formula:

m = 1 + 0.6 / 0.2 + 0.6 = 1 + 3 = 4

Therefore, the money multiplier is 4.

The money supply (M) is calculated by multiplying the money multiplier (m) by the monetary base (B). Given that B = $1000, we can substitute these values into the formula:

M = m * B = 4 * $1000 = $4000

Therefore, the money supply is $4000.

However, none of the options provided (A, B, C, D) match these calculations. There might be a mistake in the question or the provided options.

In country A, the currency-deposit ratio is 0.6 and the reserve-deposit ratio is 0.2,What is the money multiplier? If the monetary base is ＄1000, What is the money supply?A.m=2; M=＄2000B.m=0.8; M=＄800C.m=1.6; M=1600D.m=2; M=＄1800

Question

Solution

Similar Questions

Upgrade your grade with Knowee