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Currency econ homework

  1. Jul 14, 2007 #1

    413

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    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.
     
  2. jcsd
  3. Jul 14, 2007 #2

    Evo

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    Staff: Mentor

    Is this a homework assignment?
     
  4. Jul 14, 2007 #3

    413

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    no, it a textbook question and i am studying for exam.
     
  5. Jul 24, 2007 #4

    EnumaElish

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    Homework Helper

    You should study the text before trying to solve the questions.
     
  6. Jul 24, 2007 #5

    berkeman

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    Staff: Mentor

    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.
     
  7. Jul 24, 2007 #6
    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.
     
  8. Jul 24, 2008 #7
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