Question

If currency held by the public equals $100 billion, reserves held by banks equal $50 billion, and bank deposits equal $500 billion, then the money supply equals: $150 billion. $650 billion. $100 billion. $600 billion.

Answer 1

Answer:

$600 billion

Explanation:

Given that,

Currency held by the public = $100 billion

Reserves held by banks = $50 billion

Bank deposits = $500 billion

The money supply refers to the total money in the circulation.

Therefore, the total money supply is as follows:

= Currency held by the public + Deposits with the bank

= $100 billion + $500 billion

= $600 billion