8. The evolution of the payment system from barter to golds and silvers, then to paper money, then to checks, can be understood as a consequence of A) government regulations designed to increase the efficiency of the payment system. B) government regulations designed to promote payment system security. C) innovations that reduce the cost of exchanging goods and services. D) competition between companies to make it easier for customers to buy their products. 9. is the narrowest monetary aggregate reported by the central bank (The Fed). A) MO B) M1 C) M2 D) M3 10. An increase in the monetary base that affects currency is while the increase that affects deposits is A) multiplied; multiplied B) not multiplied; multiplied C) multiplied; not multiplied D) not multiplied; not multiplied

8. The evolution of the payment system from barter to golds and silvers, then to paper money, then to checks, can be understood as a consequence of A) government regulations designed to increase the efficiency of the payment system. B) government regulations designed to promote payment system security. C) innovations that reduce the cost of exchanging goods and services. D) competition between companies to make it easier for customers to buy their products. 9. is the narrowest monetary aggregate reported by the central bank (The Fed). A) MO B) M1 C) M2 D) M3 10. An increase in the monetary base that affects currency is while the increase that affects deposits is A) multiplied; multiplied B) not multiplied; multiplied C) multiplied; not multiplied D) not multiplied; not multiplied

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. One of the banking innovations in the 1960s was the payment of interest on certain types of demand deposits. Assume that interest is paid on money at the nominal rate Rm, which equals (R − x), where x is the nominal return on bonds, which is exogenously determined by market structures and the cost of servicing deposits. (i) Use Baumol’s transactions demand model to derive the demand function for money. (ii) Generalizing the above demand function to md(y, R, x), shows the behavior of the LM curve for shifts in x and P. (iii) What is the effect of an increase in x on aggregate demand, output and price level in the neoclassical model? (iv) Assuming that both R and x always increase by the expected rate of inﬂation, do (ii) and (iii) again.
1. When you go to a restaurant and see the items stated in U.S. dollars this is an example of money serving: a) As a store of value b) As a medium of exchange c) As a unit of account: d) All of the above
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Illustrate THREE (3) reasons why not all commodities are suitable to represent money. Please give explanation in details with examples.I
I only need Help with part (B)
8. The reserve requirement, open market operations, and the money supply Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $400. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) (Dollars) 20 10 A higher reserve requirement is associated with a money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%,…
44 The use of money as a unit of account: a. relies on the existence of a double coincidence of wants. b. inhibits the exchange of goods and services. c. allows individuals to compare relative values of goods and services easily. d. discourages specialization and division of labor. e. makes it difficult to compare the relative values of goods and services.
3. Money held by the public that includes demand deposits is measured as (A) M1 (B) M2 (C) MO (D) Fiat money (E) Commodity money
9. Salaries in the financial sector are often composed of a flat wage, and a bonus paid when firm does well. Does this unusual structure make workers in the financial sector happy?
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2. When you discover a $20 bill in your coat pocket that you placed there last winter, you find you were unexpectedly using money as a O medium of exchange. store of value. unit of account. factor of production.
Consider a small economy with only 2 banks, DSB and TKB, in the banking industry. Both banks have to decide whether to charge high or low interest rates. If both banks charge a high interest rate, DSB will earn $200m while TKB will earn $85m. If both banks charge a low interest rate, DSB will earn $250m while TKB will earn $400m. If DSB charges a higher interest rate while TKB charges a low interest rate, DSB will earn $300m while TKB will earn $65m. If DSB charges a low interest rate while TKB charges a high interest rate, DSB will earn $75m while TKB will earn $500m. Construct the payoff matrix for the earning of both banks, apply game theory concepts and solve for the Nash equilibrium and explain whether this is a prisoner's dilemma game.