Answer each of the following questions.
a. Bank reserves are 400, the public holds 1,000 in currency, and the desired reserve-deposit ratio is 0.25. Find deposits and the money supply.
b. The money supply is 500 and currency held by the public equals bank reserves. The desired reserve-deposit ratio is 0.25. Find currency held by the public and bank reserves.
c. The money supply is 1,250, of which 250 is currency held by the public. Bank reserves are 100. Find the desired reserve-deposit ratio.

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a Deposits bank reserves desired reserves deposit rati... View the full answer