Question

# An economy has a borrowed monetary base of \$500 billion and a nonborrowed monetary base of...

An economy has a borrowed monetary base of \$500 billion and a nonborrowed monetary base of \$780 billion. The required reserve ratio is 10%. The total amount of currency in circulation is \$1,350 billion. The total checkable deposits is \$2,215 billion. The banking system holds a total of \$400 billion in excess reserves.

What is the monetary base (in billion of \$) of the economy? Round your answer to at least 2 decimal places. (E.g. \$1,234,567,890 should be entered as 1.23)

An economy has a borrowed monetary base of \$500 billion and a nonborrowed monetary base of \$780 billion. The required reserve ratio is 10%. The total amount of currency in circulation is \$1,350 billion. The total checkable deposits is \$2,215 billion. The banking system holds a total of \$400 billion in excess reserves.

What is the currency ratio (in decimal form)? Round your answer to at least 4 decimal places.

An economy has a borrowed monetary base of \$500 billion and a nonborrowed monetary base of \$780 billion. The required reserve ratio is 10%. The total amount of currency in circulation is \$1,350 billion. The total checkable deposits is \$2,215 billion. The banking system holds a total of \$400 billion in excess reserves.

What is the excess reserve ratio (in decimal form)? Round your answer to at least 4 decimal places.

Calculate the monetary base -

Monetary base = Borrowed monetary base + Non-borrowed monetary base

Monetary base = \$500 billion + \$780 billion

Monetary base = \$1,280 billion

The monetary base of the economy is \$1,280 billion.

Calculate the currency ratio -

Currency ratio = Currency in circulation/Total checkable deposits

Currency ratio = \$1,350 billion/\$2,215 billion

Currency ratio = 0.6095

The currency ratio is 0.6095

Calculate the excess reserve ratio -

Excess reserve ratio = Excess reserves/Total checkable deposits

Excess reserve ratio = \$400 billion/\$2,215 billion

Excess reserve ratio = 0.1806

The excess reserve ratio is 0.1806