# BUS 204 Unit 4 Assignment

May 5th, 2015
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BUS 204 Unit 4 AssignmentQuestion:In Westlandia, the public holds 50% of M1 in the form of currency, and the required reserve ratio is 20%.1. Estimate how much the money supply will increase in response to a new cash deposit of \$500 by completing the accompanying table.(Hint: The first row shows that the bank must hold \$100 in minimum reserves20% of the \$500 depositagainst this deposit, leaving \$400 in excess reserves that can be loaned out. However, since the public wants to hold 50% of the loan in currency, only \$400 0.5 = \$200 of the loan will be deposited in round 2 fr

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