Find excess reserves: Excess reserves initial deposit - required reserves Step 2: Find the Potential Deposit...

Transcribed Image Text:

Find excess reserves: Excess reserves initial deposit - required reserves Step 2: Find the Potential Deposit Creation: Potential deposit creation = excess reserves X simple money multiplier A. Given the above formula, how much money is created from a $320,000,000.00 deposit of new money when the reserve ratio is: 1. 50% 2. 40% 3. 25% 4. 10% 5. 5% B. What is the mathematical relationship between the reserve ratio and the amount of money created? C. What could cause the creation of money process to be altered? In what way? 5. What are the main theories of how monetary policy impacts Aggregate Spending? What are their strengths and what are their weaknesses? Which do you believe to be most compelling? Defend your view in a 3-5 paragraph essay. Graph the link between the money market, investment spending market, and the aggregate spending model, and explain it carefully. Find excess reserves: Excess reserves initial deposit - required reserves Step 2: Find the Potential Deposit Creation: Potential deposit creation = excess reserves X simple money multiplier A. Given the above formula, how much money is created from a $320,000,000.00 deposit of new money when the reserve ratio is: 1. 50% 2. 40% 3. 25% 4. 10% 5. 5% B. What is the mathematical relationship between the reserve ratio and the amount of money created? C. What could cause the creation of money process to be altered? In what way? 5. What are the main theories of how monetary policy impacts Aggregate Spending? What are their strengths and what are their weaknesses? Which do you believe to be most compelling? Defend your view in a 3-5 paragraph essay. Graph the link between the money market, investment spending market, and the aggregate spending model, and explain it carefully.

Answer rating: 100% (QA)

A Given the above formula how much money is created from a 32000000000 deposit of new money when the reserve ratio is 1 50 Excess reserves 32000000000 050 x 32000000000 16000000000 Potential deposit c... View the full answer