Economists Occasionally Speak of "Helicopter Money" as a Shorthand Approach

question 96

Essay

Economists occasionally speak of "helicopter money" as a shorthand approach to explaining increases in the money supply. Suppose the Governor of the Bank of Canada flies over the country in a helicopter, dropping 10 million newly printed $100 bills (a total of $1 billion). By how much will the money supply increase in the following scenarios, holding everything else constant:
a.all of the new bills are held by the public as currency?
b.all of the new bills are deposited in banks that choose to hold 10 percent of their deposits as reserves (and no one in the economy holds any currency)?
c.all of the new bills are deposited in banks that practice 100-percent-reserve banking?
d.people in the economy hold half of their money as currency and half as deposits, while banks choose to hold 10 percent of their deposits as reserves?

---

Definitions:

Feasibility Study

An assessment of the practicality and potential success of a proposed project or system.

Scale Back Features

The process of reducing the number or complexity of features in a product or project, typically to focus resources or meet constraints like time or budget.

Megapixel

A unit of graphic resolution equivalent to one million pixels, commonly used to denote the resolution of digital cameras or images.

Digital Camera

A device that captures photographs in a digital format, storing them electronically for viewing, editing, and sharing.