Suppose people are holding $150 million of currency, total deposits in the banking system are $2,500 million, and bank reserves are $500 million. What is the current supply of money?The current supply of money is $ million.
Question
Suppose people are holding 2,500 million, and bank reserves are million.
Solution
The current supply of money, also known as the money supply, is calculated by adding the total amount of currency held by the public and the total deposits in the banking system.
In this case, the total amount of currency held by the public is 2,500 million.
So, to calculate the money supply, we add these two amounts together:
2,500 million (deposits) = $2,650 million
Therefore, the current supply of money is $2,650 million.
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