Question: 4. In a country, monetary base ( B ) is $200 billion. People hold one fourth (or 25%) of their money as currency (75% as

4. In a country, monetary base (B) is $200 billion. People hold one fourth (or 25%) of their money as currency (75% as bank deposits). Commercial banks hold a third of their deposits as reserve. What are reserve-deposit ratio (rr), currency-deposit ratio (cr), money multiplier (m), and the money supply (M)?

5. Following question above, suppose one day, the public worries about a coming financial crisis would collapse banking system in this country. People now want to hold half (50%) their money as currency. If the central bank does nothing, how much is the new total money supply?

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