Question: Can someone please help me with this question. We were given the following figures. Monetary item Values Notes and coins in circulation $5 millions All
Can someone please help me with this question. We were given the following figures.
Monetary item Values
Notes and coins in circulation $5 millions
All the notes and coins issued by the central bank $7 millions
Demand deposits $12 millions
Short-term deposits (less than 6 months) $20 millions
Long-term deposits (more than 6 months) $36 millions
Consumer credit card outstanding balances $15 millions
Estimated velocity of circulation 150 times a year
Estimated quantity of money $20 millions
Price index at year 2020 125
Estimated currency drain ratio 0.25
Estimated desired reserve ratio 0.15
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we are required to calculate M1 and M2.
we're also required to use the theory of the quantity theory of money to calculate the real GDP.
as well as to calculate and interpret the money multiplier.
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