Define the three functions of money. 82) Describe the fractional reserve banking system.

Define the three functions of money. 82) Describe the fractional reserve banking system.

 Define the three functions of money.

82) Describe the fractional reserve banking system.

83) You are given the following information on the banking system.

Reserve requirementrr = 0.08

Currency-deposit ratioc = 0.10

Excess reserve ratioe = 0.05

 

Compute the simple deposit and money multipliers.

84) You are given the following information on the banking system.

Reserve requirementrr = 1.00

Currency-deposit ratioc = 0.10

Excess reserve ratio    e = 0.00

 

Compute the simple deposit and money multipliers.   

85) The monetary base is $1,000 billion and the money multiplier is 5.5. What is the size of the money supply?

86) Why is the money multiplier smaller than the simple deposit multiplier?

87) What are the three monetary policy tools of the Fed? Briefly describe how each tool can be used to implement an expansionary monetary policy and a contractionary monetary policy.