Answer to Question #142824 in Macroeconomics for john

Question

In the Namibian economy, the commercial banks have deposits of N$600 billion. Their reserves are N$60 billion. All reserves are in deposits with the Bank of Namibia and the commercial banks hold no excess reserves. There is N$120 billion in Bank of Namibia, notes outside the banks, and there are no coins.
a) What is the economy's monetary base? (5 marks)
b) What is the quantity of money in the economy? (5 marks)
c) Calculate the money multiplier. (5 marks)
d) Suppose the Bank of Namibia undertakes an open market purchase of securities of so that the monetary base increases by $5 billion. By how much will the quantity of money change?

Answer 1

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