1. From 2009 to 2010, per capita real gross domestic product (GDP) in country C grew by 2.8 percent. Given that price level increased by 2 percent and the population grew by 1 percent, how much was the growth rate of the real GDP? 2. You withdraw $100 from your checking account. How much does M1 change? How much does M2 change?

1. From 2009 to 2010, per capita real gross domestic product (GDP) in country C grew by 2.8 percent. Given that price level increased by 2 percent and the population grew by 1 percent, how much was the growth rate of the real GDP? 2. You withdraw $100 from your checking account. How much does M1 change? How much does M2 change?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Hey, I need help with the following macro question. Thank you in advance! Imagine that the chair of the Federal Reserve announced that, as of the following day, all currency in circulation in the United States would be worth 10 times its face denomination. For example, a $10 bill would be worth $100; a $100 bill would be worth $1,000; and so forth. Furthermore, the balances in all checking and savings accounts would be multiplied by 10. So, for example, if you had $500 in your checking account, as of the following day your balance would be $5,000. Would you actually be 10 times better off on the day the announcement took effect? Why or why not?
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2. Consider the following data (all values are in billions of dollars): (b) Currency Transactional deposits Bank reserves June 1930 June 1931 June 1932 $ 3.681 3.995 4.959 21.612 19.888 15.490 3.227 3.307 2.829 (a) Calculate the values for each period for the currency-deposit ratio, the ratio of total reserves to deposits, the monetary base, M1, and the money multiplier. Can you explain why the currency-deposit ratio and the ratio of total reserves to deposits moved as they did between 1930 and 1932(Great depression era)?
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