Pretend you are in charge of conducting monetary policy at the New York Fed and you have the following initial conditions. Initial Conditions rr/D = ....

Pretend you are in charge of conducting monetary policy at the New York Fed and you have the following initial conditions.

Initial Conditions

rr/D = .10

C = 800 billion

D = 1600 billion

ER = 0

M = C + D 

Given the above information (show all work on your exam sheet):

i) Calculate the MB.

ii) Calculate the money multiplier (mm).

iii) What is the money supply (use MS = mm x MB)?