Question

After a sluggish quarter, the Federal Reserve Bank decides to increase the money supply in the economy. When the money-creation process is complete, the Fed wants there to be $20 billion worth of new funds in the money supply. If the required reserve ratio is 5%, what is the simple money multiplier, and by how much should the Fed initially increase the money supply? Assume that all currency is deposited in banks and that banks hold no excess reserves.

Answer 1

Answer:

I don't know the answers

Explanation:

hi this is akshaya Jyothi shall we be frnds

Answer 2

The Federal Deposit Insurance Corporation makes sure Depositors get their money back if an insured bank fails. This agency was implemented during the Great Depression in response to the high number of bank failures. The peace of mind the FDIC provided depositors resulted in a decreased frequency of Bank Runs. However, since banks and their customers are no longer fully exposed to risk, there is increased potential for Moral Hazard.