Description of this paper

Consider a world in which there is no currency

Description

solution


Question

Consider a world in which there is no currency and depository institutions issue only checkable deposits and desire to hold no excess reserves. The required reserve ratio is 20 percent. The central bank sells $1 billion in government securities. What happens to the money supply? Give reasons to support your answer.

 

Paper#29419 | Written in 18-Jul-2015

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