- An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit in the form of cash.
- (i)If the high-powered money (H) is RM100 billion, calculate the money supply in this economy
- (ii)How much will the money supply change if the Central Bank buys RM5 billion bonds in the market?
- (ii)Say the Central Bank targets the money supply is RM650 billion. How much the high-powered money (H) in question
- a) above should change to achieve this target?
- (B) Technological advancement nowadays enable people to pay for their daily transactions at their fingertips. In your opinion how this situation will affect the demand for money.
