bonus assignment 7

Vanier College Faculty of Arts, Business and Social Sciences
Introduction to Macroeconomics
383-920-VA
Bonus Assignment #5

Instructions:
Get into groups your study groups in order to complete this assignment. Staple your answers to this cover page: Maximum 4 students.

Show all work/calculations as failure to do so will severely diminish your grade.
You are reminded about the College’s policies on copying and plagiarism.

Student Family Name:
Student First Name:
Student I.D. #:

Student Family Name:
Student First Name:
Student I.D. #:

Student Family Name:
Student First Name:
Student I.D. #:

Student Family Name:
Student First Name:
Student I.D. #:

Due Date: The day of your midterm #3.

Question #1(16 marks):

A little village isolated from any other human settling has one bank, the bank ABC. Bank ABC has deposits for 10000\$ and a desired reserves coefficient of 2%, Assuming that there are no leakages and excess reserves from untaken loans of 2000\$. Answer the following questions:

(3 marks) How much currency (cash) is in circulation?
The formula for the total currency in the country is:

Hence:

Therefore, the total currency in the market is:
Total currency = 10,000 + (10000*0.02) = \$10,200

(3 marks) How much money (monetary mass) there is in this little village?
The equation will give the total monetary mass
Total Monetary Mass=money in circulation+deposit+untaken loans
Therefore,
Total monetary mass = 10,000 + 10,200 + 2000 = \$ 22,200