Business
Business, 06.05.2020 00:19, callieroberts1699

In the economy of Panicia, the monetary base is $1,000. People hold a third of their money in the form of currency (and thus two-thirds as bank deposits). Banks hold a third of their deposits in reserve.

One day, fear about the banking system strikes the population, and people now want to hold a third of their money in the form of currency. If central bank does nothing, what is the new money supply?

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In the economy of Panicia, the monetary base is $1,000. People hold a third of their money in the fo...

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