Macroeconomics intermediate

Sep 17th, 2015
Anonymous
Category:
Accounting
Price: $5 USD

Question description

Economists occasionally speak of �helicopter money� as a short-hand approach to explaining
increases in the money supply. Suppose the Governor of the Fed flies over
the country in a helicopter dropping 10,000,000 in newly printed $100 bills (a total of $1
billion). By how much will the money supply increase if, holding everything else constant:

d. people in the economy hold half of their money as currency and half as deposits, while
banks choose to hold  10 percent of their deposits as reserves?

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