In this problem, we are going to measure the money multiplier one year prior to the Great Recession (12/2006) and compare it to the money multiplier 5 years since (12/2011). The implication, as you may have guessed, is that hence the Fed has been paying interest on excess reserves (10/2008), the excess reserve to deposit ratio has risen which implies a lower money multiplier.
Data you require for problem 1:
Monetary Base Dec 2006: 837.701 ; Dec 2011: 2603.487
Excess Reserves Dec 2006: 1.863 ; Dec 2011: 1502.206
Currency Dec 2006: 749.6 ; Dec 2011: 1001.5
Required Reserves Dec 2006: 41.419 ; Dec 2011: 96.510
Demand Deposits Dec 2006: 609.9 ; Dec 2011: 1154.6
a) Measure the money multiplier for Dec 2006, one year prior to the Great Recession. Please conclude all work.
b) Measure the money multiplier for Dec 2011, 5 years hence and a little more than 3 years after the Fed got the authority to pay interest on excess reserves. See the Federal Reserve's press release.