Explain why the money multiplier differs from the simple deposit multiplie
Chapter 13, Technical QuestionsIf the reserve requirement (rr) is 0.2, what is the simple deposit multiplier?If, in addition, the currency deposit ratio (c) is 0.05 and the excess reserve ratio (e) is 0.15, what is the money multiplier?Explain why the money multiplier differs from the simple deposit multiplier.Chapter 14, Application Question1. Describe how the following statements relate to the AD–AS model:a. The Fed has bought more than $2 trillion of Treasury and mortgage bonds to stimulate the economy.b. The above actions by the Fed may cause inflation to rise to levels that most would consider unacceptable.c. The Fed expected a weaker dollar to help increase exports.d. Businesses already have ample access to cheap credit and are reluctant to borrow, hire, and invest for other reasons.
