An economy has a reserve ratio equals to 12 The society is holding 10 of the deposit in the form of cash (i)If the high powered money (H) is RM100 billion, calculate the money supply in this economy (ii)How much will the money supply change if the Central Bank buys RM5 billion bonds in the market (...

Ans Reserve ratio 12 Currency cash 10 of deposit High powered moneyH 100bilion 1We have to c ...

An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit

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An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit in the form of cash.
(i)If the high-powered money (H) is RM100 billion, calculate the money supply in this economy
(ii)How much will the money supply change if the Central Bank buys RM5 billion bonds in the market?
(ii)Say the Central Bank targets the money supply is RM650 billion. How much the high-powered money (H) in question
a) above should change to achieve this target?
(B) Technological advancement nowadays enable people to pay for their daily transactions at their fingertips. In your opinion how this situation will affect the demand for money.