Problem
The government of Eastlandia uses measures of monetary aggregates similar to those used by the United States, and the central bank of Eastlandia imposes a required reserve ratio of 10%. Given the following information, answer the questions below. Bank deposits at the central bank = $200 million Currency held by public = $150 million Currency in bank vaults = $100 million
Checkable bank deposits = $500 million Traveler's checks = $10 million
a. What is M1?
b. What is the monetary base?
c. Are the commercial banks holding excess reserves?
d. Can the commercial banks increase checkable bank deposits? If yes, by how much can checkable bank deposits increase?
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.