Calculating the level of high- powered money given the Currency - deposit ratio of the public and the cash - reserve ratio of the banks
Suppose the ratio of deposits that banks hold in the form of reserves is 7 percent. Suppose further that people want to hold 8 percent of their deposits in the form of cash. Then, if the Fed wants the money supply to be $6,228 billion, illustrate what is the necessary level of high-powered money?