Assume That the Monetary Base (B) Is $100 Billion, the Reserve-Deposit

question 39

Essay

Assume that the monetary base (B) is $100 billion, the reserve-deposit ratio (rr) is 0.1, and the currency-deposit ratio (cr) is 0.1. a. What is the money supply?
b. If $r r$ changes to $0.2$ , but $c r$ is $0.1$ and $B$ is unchanged, what is the money supply?
c. If $r r$ is $0.1$ and cris $0.2$ , but $B$ is unchanged, what is the money supply?

---

Definitions:

Accumulated Depreciation

The total amount of depreciation expense allocated to a fixed asset since it was in service, reducing its book value on the balance sheet.

Service Life

The estimated duration of time that an asset is expected to be usable for its intended purpose.

Asset Impairment

A significant and sudden decline in the usability or fair market value of an asset, which necessitates the reduction of its book value on financial statements.

FASB

Financial Accounting Standards Board, an independent nonprofit organization responsible for establishing accounting and financial reporting standards for companies and nonprofits in the United States.