Answer the two following questions: (12 Marks)

A. Explain the four functions of money. (4 Marks)

1. (1 mark)

2. (1 mark)

3. (1 mark)

4. (1 mark)

B. The central bank in a country released the following statistics. Total deposits in banks amounted to $ 500 million, notes and coins outside banks reached $ 100 million and reserves of banks held at the central bank amounted to $50 million. Use these figures to calculate the following: (8 Marks)

1. Calculate the quantity of money (the money supply) (1 mark)

2. Calculate the monetary base (1 mark)

3. Calculate currency drain ratio (2 marks)

4. Calculate the reserve ratio (2 marks)

5. Calculate the money multiplier (2 marks)