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Today, 20:21

If banks hold no excess reserves, checkable deposits total $1.5 billion, currency totals $400 million, and the required reserve ratio is 10%, then the monetary base equals

a. $550 million.

b. $1.54 billion.

c. $1.9 billion

d. $15 billion.

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Answers (1)
  1. Today, 20:49
    0
    monetary base = $550 million

    so correct option is a. $550 million.

    Explanation:

    given data

    checkable deposits total = $1.5 billion

    currency totals = $400 million

    required reserve ratio = 10%

    to find out

    monetary base

    solution

    we get here monetary base that is express as

    monetary base = Currency total + bank reserves ... 1

    here bank reserves = 10% of $1.5 billion

    bank reserves = $150 million

    so put value in equation 1 we get monetary base

    monetary base = $400 million + 150 million

    monetary base = $550 million

    so correct option is a. $550 million.
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Home » Business » If banks hold no excess reserves, checkable deposits total $1.5 billion, currency totals $400 million, and the required reserve ratio is 10%, then the monetary base equals a. $550 million. b. $1.54 billion. c. $1.9 billion d. $15 billion.
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