Kenneth R. Szulczyk
- Required reserve ratio equals 10%, and the banks hold zero excess reserves. Compute the
change in the M1 definition of the money supply if a person withdraws $5,000 in cash from
his checking account. - Identify the currency-deposit ratio, and explain why it changes over time.
- Why do excess reserves present a problem for the Fed?
- Why does the Fed have trouble controlling the money supply?
- Currency in circulation equals $500 billion; checkable deposits equal $900 billion; total
bank reserves are $700 billion, and total time deposits equal $1,200 billion. Calculate the M1
and M2 money multipliers.