Calculating Quantity of Money: Currency, Demand Deposits, and Bank Reserves

[413]

The economy contains 2000 $1 bills.

a) If people hold all money as currency, what is the quantity of money?
-Is quantity of money = $2000?

b) If people hold all money as demand deposits and banks maintian 100 % reserves, what is the quantity of money?
-Is quantity of money also $2000?

c) If people hold equal amounts of currency and demand deposits and banks maintain 100% reserves, what is the quantity of money?

d)If people hold all money as demand depositis and banks maintain a reserve ratio of 10%, what is the quantity of money?

e)If people hold equal amounts of currency and demand deposits and banks maintain 10% reserves, what is the quantity of money?

thanks for any help.

 

[Evo]

Is this a homework assignment?

 

[413]

no, it a textbook question and i am studying for exam.

 

[EnumaElish]

You should study the text before trying to solve the questions.

 

[berkeman]

no, it a textbook question and i am studying for exam.

Coursework and homework questions belong in the Homework Help forums, which is where I'm moving this thread now. It's also a set of math questions, not philosophy & social science.

 

[Ronnin]

These are not technically math questions. These regard the reserve ratios banks must keep at the Fed and the amount of money the banking system can lend against those said reserves. That is if I am reading these questions correctly. If the reserve ratio is 10% then for every dollar the banks lend they must have 10 cents stored at the FED to back that note up.

 

[jsilver85]

go to this website...the entire question is on it, i think its the last question,

http://www.uwm.edu/~amurshid/principles/afinal02b.pdf

I think I'm in your class haha