The economy of Moneyland contains 5000 $1 bills. a. If people hold equal amounts of currency and demand deposits and banks maintain %100 reserves , what is the quantity of money? b. If people hold all money as demand deposits and banks maintain %20 reserves , what is the quantity of money?

The economy of Moneyland contains 5000 $1 bills. a. If people hold equal amounts of currency and demand deposits and banks maintain %100 reserves , what is the quantity of money? b. If people hold all money as demand deposits and banks maintain %20 reserves , what is the quantity of money?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section: Chapter Questions

Problem 12PA

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Question

The economy of Moneyland contains 5000 $1 bills.

a. If people hold equal amounts of currency and demand deposits and banks maintain
%100 reserves , what is the quantity of money?

b. If people hold all money as demand deposits and banks maintain %20 reserves , what
is the quantity of money?

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