The monetary base (B) is the sum of currency (C) and reserves (R). Reserves can be calculated as a fraction of deposits (D) based on the reserve-deposit ratio (rr), and currency can be calculated as a fraction of deposits based on the currency-deposit ratio (cr).

Given that the currency-deposit ratio (cr) is 0.8 and the currency (C) is $800 billion, we can calculate the deposits (D) as follows:

C = cr * D
$800 billion = 0.8 * D
D = $800 billion / 0.8
D = $1000 billion

Given that the reserve-deposit ratio (rr) is 0.2, we can calculate the reserves (R) as follows:

R = rr * D
R = 0.2 * $1000 billion
R = $200 billion

Finally, we can calculate the monetary base (B) as the sum of currency (C) and reserves (R):

B = C + R
B = $800 billion + $200 billion
B = $1000 billion

So, the monetary base is $1000 billion.

Question

The monetary base (B) is the sum of currency (C) and reserves (R). Reserves can be calculated as a fraction of deposits (D) based on the reserve-deposit ratio (rr), and currency can be calculated as a fraction of deposits based on the currency-deposit ratio (cr).

Given that the currency-deposit ratio (cr) is 0.8 and the currency (C) is $800 billion, we can calculate the deposits (D) as follows:

C = cr * D
$800 billion = 0.8 * D
D = $800 billion / 0.8
D = $1000 billion

Given that the reserve-deposit ratio (rr) is 0.2, we can calculate the reserves (R) as follows:

R = rr * D
R = 0.2 * $1000 billion
R = $200 billion

Finally, we can calculate the monetary base (B) as the sum of currency (C) and reserves (R):

B = C + R
B = $800 billion + $200 billion
B = $1000 billion

So, the monetary base is $1000 billion.

Knowee AI · Accepted Answer

The monetary base (B) is the sum of currency (C) and reserves (R). Reserves can be calculated as a fraction of deposits (D) based on the reserve-deposit ratio (rr), and currency can be calculated as a fraction of deposits based on the currency-deposit ratio (cr).

Given that the currency-deposit ratio (cr) is 0.8 and the currency (C) is $800 billion, we can calculate the deposits (D) as follows:

C = cr * D
$800 billion = 0.8 * D
D = $800 billion / 0.8
D = $1000 billion

Given that the reserve-deposit ratio (rr) is 0.2, we can calculate the reserves (R) as follows:

R = rr * D
R = 0.2 * $1000 billion
R = $200 billion

Finally, we can calculate the monetary base (B) as the sum of currency (C) and reserves (R):

B = C + R
B = $800 billion + $200 billion
B = $1000 billion

So, the monetary base is $1000 billion.

The currency-deposit ratio is 0.8 and the currency is $ 800 billion, and the reserve-deposit ratio is 0.2. what is monetary base?

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