6. In the economy, the following statistics describe the money supply
CU $1250 billion
RES$125 bon
DEP $2.000 billion
Given these data, calculate the amount of the monetary base:
BASE-S____ billion
Calculate the quantity of the money supply:
M-S____ billion
Calculate the ratio of reserves to deposits
(carry out to four decimals)
_____
Calculate the ratio of currency to deposits
(carry out to four decimals)
_____
Calculate the money multiplier
(carry out to four decimals)
_____
Now, suppose a shock causes banks to change the amount of reserves they hold relative to deposits, so that res changes from 0.0625 to 0.0621. Suppose that when this happens,
and DEP do not change. However, the change in res will affect M, CU, RES.
Calculate the new value of the money multiplier
(carry out to four decimals)
_____
Now, calculate the new value of the money supply
M-$____ billion
Very challenging: Calculate the new amount of bank deposits:
DEP-S____ billion
Find the new total amount of currency held by the non-bank public:
CU-$____ billion
Calculate the new amount of bank reserves:
RES $____ billion