Problem
In 1999, there was broad concern about the Y2K computer problem. Banks, and the Fed, predicted that many people would want to hold additional cash in case software glitches blocked access to their bank accounts on January 1, 2000. Use a money multiplier analysis (see Chapter 28) to predict what happens to deposits and the money supply if people increase their holdings of cash and the Fed attempts to keep the federal funds rate constant. What are the consequences for the money supply of the increased demand for cash?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.