Respuesta :
Answer:
Compute the money multiplier as follows.
[tex]Money multiplier = \frac{1}{Reverse Ratio}[/tex]
[tex]Money multiplier = \frac{1}{0.2}[/tex]
Money Multiplier = 5
Hence, the money multiplier is 5
Compute the cash supply if the central bank purchases $5,000 worth of bonds as follows:
Money supply = 5 × 5,000
Money supply = $25,000
Hence, the raise in the money supply is $25,000
Compute the rise in money supply, if someone deposits in a bank $5,000:
Excess reserves = (1 - 20%) × 5,000
Excess reserves = (1 - 0.2) x 5,000
Excess reserves = 0.8 x 5,000
Excess reserves = $4,000
Money supply = Money multiplier x Excess reserves
Money supply = 5 x 4,000
Money supply = $20,000
The fiscal inventory will increment if the Fed purchases $5,000 worth of bonds. The two stores will prompt money related development. Bit Fed's stores is new cash which is covered up in the container. This suggests $5,000 from the treat container is now part of the cash supply.
In this manner, every single other thing equivalent, if the Federal Reserve purchases $5,000 worth of securities, the cash supply will extend more than if somebody stores in a bank $5,000 that she had been covering up in her treat container.
Answer:
Explanation:
1. Money multiplier = 1 / Reserve requirement
Money multiplier = 1/20% = 1 / 0.2 = 5
Increase in money supply = Money Multiplier * Worth of bonds
Increase in money supply = 5 x $5,000
Increase in money supply (deposits) = $25,000
2. Increase in money supply = Increase in deposits - Cookie jar money
Increase in money supply = $25,000 - $5,000
Increase in money supply =$20,000
3. Both deposits will lead to monetary expansions, but the deposit that results from the Fed's purchase of bonds is new money, whereas the $5,000 from the cookie jar is already part of the money supply.
