Pretend you are in charge of conducting monetary policy at the New York Fed and

Question

Pretend you are in charge of conducting monetary policy at the New York Fed and you have the following initial conditions. Initial Conditions m/D = .10 C- 600 billion D # 1200 billion ER = 0 M C D Given the above information (show all work on your exam sheet): i) Calculate the MB. i) Calculate the money multiplier (mm). ili) What is the money supply (use MS- mm x MB)? NOTE: This work is to be done using the Exam Sheet 2 Part 2 A You will upload this wonk, with other work to be done on this sheet, to question #13 on this exam. Enter the word "Finished" into along the text-box below when ready to move on.

Explanation / Answer

9. i) MB = C + D = 600 + 1200 = $ 1800 billion

ii) mm = 1/0.10 = 10

iii) Money supply = 10 x 1800 billion = $ 18000 billion

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