Answer:
0.223
Explanation:
The values given are:
r = required reserve ratio = 0.15
c = {C/D} = currency ratio = 0.45
e = {ER/D} = excess reserve ratio = 0.05
MB = the monetary base = $3,000 billion
Therefore, money multiplier is:
(1 + c)/(r + e + c)
= (1 + 0.45)/(0.15 + 0.05 + 0.45)
= (1.45)/(0.65)
= 2.23
money multiplier=2.23
Money supply= change in reserves× money multiplier
change in reserve=0.15-0.05
=0.1
money multiplier=2.23
Money supply= 0.1 ×2.23
= 0.223
Thus, the money supply is 0.223.
