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Q&A
Why (not how) did money evolve out of a
barter economy?
If individuals remove funds from their
checkable deposits and transfer them to
their money market accounts, will M1 fall
and M2 rise? Explain your answer.
How does money reduce the transaction
costs of making exchanges?
Q&A
If a banks deposits equal $579 million and the
required-reserve ratio is 9.5%, what dollar amount
must the bank hold in reserve form?
If the Fed creates $600 million in new reserves,
what is the maximum change in checkable
deposits that can occur if the required-reserve ratio
is 10%?
Bank A has $1.2 million in reserves and $10
million in deposits. The required-reserve ratio is
10%. If Bank A loses $200,000 in reserves, by
what dollar amount is it reserve deficient?