The market capitalization of a given base money can be calculated by: Group of answer choices dividing its market price by the total quantity of the base money outstanding. multiplying the total quantity of the base money outstanding by its market price. calculating how many times a currency changes hands within a specific period of time. dividing the total quantity of the base money outstanding by the market price.
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Consider an expansionary open market operation. Suppose the Federal Reserve buys government securities from commercial banks. Suppose that the sellers of government securities redeem these checks drawn on the New York Fed for currency. Then, ceteris paribus, bank reserves, currency in circulation, and thus the monetary base will increase.
Akash M.
In the economy of Nocoin, bank deposits are $\$ 300$ billion. Bank reserves are $\$ 15$ billion, of which two thirds are deposits with the central bank. Households and firms hold $\$ 30$ billion in bank notes. There are no coins. Calculate a. The monetary base and quantity of money. b. The banks' desired reserve ratio and the currency drain ratio (as percentages).
2. Suppose the public holds 30% of their money as currency and the rest as deposits in their banks. Moreover, the central bank requires banks to maintain a reserve-deposit ratio of 15%. What will be the change in the total money supply if the central bank buys $10 million of government bonds from the public and pays for them by creating money (round to the nearest decimal point)? a. The money supply will decrease by $51.3 million b. The money supply will increase by $51.3 million c. The money supply will increase by $24.7 million d. The money supply will increase by $66.7 million e. All of the answers here are incorrect.
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