Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.10. iii. The demand for money is given by Mª = $Y(0.81 – 2.3i). Initially, the monetary base (H) is $77 billion, and nominal income ($Y) is $4,700 billion. Calculate the demand function for central bank money: Hª = ( ) × () billion ()

Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.10. iii. The demand for money is given by Mª = $Y(0.81 – 2.3i). Initially, the monetary base (H) is $77 billion, and nominal income ($Y) is $4,700 billion. Calculate the demand function for central bank money: Hª = ( ) × () billion ()

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.05. iii. The demand for money is given by M = $Y(0.84-3.8i). Initially, the monetary base (H) is $83 billion, and nominal income ($Y) is $4,900 billion. Calculate the demand function for central bank money: H=0x0×0 Find the equilibrium interest rate by setting the demand for central bank money (H) equal to the supply of central bank money (H). The equilibrium interest rate is %. (Round your response to two decimal places.)
I deposited Rs. 3 million of my money in a Habib Bank Limited, State Bank of Pakistan: Required rate of reserve ratio (RRR): Weekly Average Demand Liability was set as 10.0 % in June 2020. You are required to calculate the change in the money supply in the economy. If RRR decreased to 5% in August 2020, what will happen with the same deposit of Rs. 3 million. You are also required to compare and discuss it in few lines. (150 words) Answer: Evaluate the policy options open to a government when the Government wants to close a deflationary gap (negative output gap) and reduce unemployment. (200 words)
I deposited Rs. 3 million of my money in a Habib Bank Limited, State Bank of Pakistan: Required rate of reserve ratio (RRR): Weekly Average Demand Liability was set as 10.0 % in June 2020. You are required to calculate the change in the money supply in the economy. If RRR decreased to 5% in August 2020, what will happen with the same deposit of Rs. 3 million. You are also required to compare and discuss it in few lines. Q-3. (B). Evaluate the policy options open to a government when the Government wants to close a deflationary gap (negative output gap) and reduce unemployment.
Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.08. iii. The demand for money is given by M° = $Y(0.85 – 3.6i). The monetary base (H ) is $63 billion, and nominal income ($Y ) is $4.9 trillion. In the absence of any currency holdings by the public, the demand for money (M°) is equivalent to the demand for checkable deposits, and the demand for central bank money (H°) is equivalent to the demand for reserves. Given the ratio of reserves to deposits (0 = 0.08), the supply of central bank money (H = $63 billion), and the fact that equilibrium prevails in both the market for central bank money (H° = H) and the money market (M = M°), it can be deduced that the overall supply of money is $ as an integer.) billion. (Enter your response
Suppose that the demand for money function was MD = 4Y – 1000i where MD is the quantity of money demanded, i is the rate of intest (an interest of 5 means 5 percent in this problem), and Y is real national income, which currently is 1500. The supply of money is 1000, currency in circulation outside the banking system is 100, the target reserve ratio is 10 percent, there is no cash drain in the banking system, and the recessionary gap is 250. The price level does not change in this problem. What is the level of cash reserve of the banking system?
Suppose that banks are required to hold reserves equal to at least 4 per cent of their deposits and hold no excess reserves. Also suppose that desired holdings of currency by the non-bank public are 3 per cent of deposits. The total money supply is $450m. From this information calculate the following. (Note: enter numerical values only. No words or symbols) The simple deposit multiplier (to one decimal place) The money multiplier (to one decimal place) The monetary base ($m to one decimal place) $
We would expect that the level of income that would equate total demand for and total supply of money would be: (a) roughly at the level of the Fed’s interest rate target; (b) lower the lower the interest rates; (c) equal to the level that would equate realized investment with realized savings; (d) higher the lower the interest rate (or lower the higher the interest rate)
Bank reserves increase by $5,000 when the RRR is 15%. The banks initially hold an additional 1% as excess reserves but then lend out all excess reserves so that the actual reserves are equal to the required reserves. By how much does the money supply increase when the banks change from 1% to 0% excess reserves?
Consider the following equations describing real money demand: M/P=Y(4-1.5i) So, if output (Y) in the economy is 820 million USD, National bank decide to print (M) 200 million USD and price level (P) is 5, what is equilibrium level of interest rate in the economy?
Let M subscript t denote the initial money supply. A friend of yours does not trust banks and keeps all his money in cash. He buys an old car for $20,000. The seller deposits the money in her checking account in Citibank. The bank keeps 10% of the deposit in reserve and lends the rest to Jack. Jack keeps $1,000 in cash and spends the remainder on NVIDIA stock. The seller of the stock, Jane, transfers the whole amount to her checking account in Wells Fargo. Wells Fargo keeps 20% of the amount in reserve and lends to rest to Joshua. Joshua keeps $1,600 in cash and spends the rest on treasury securities. The seller of the securities happens to be the Fed. A fire in Joshua's uninsured house destroys $600 of his cash. Let M subscript t plus 1 end subscript denote the resulting money supply. Calculate the change in the money supply, M subscript t plus 1 end subscript minus M subscript t.
Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.10. iii. The demand for money is given by M = $Y(0.81 – 3.7i). If the monetary base is $67 billion and nominal income is $4.8 trillion, the equilibrium interest rate will be %. (Round your response to two decimal places.)
Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.08. iii. The demand for money is given by M = $Y(0.89 -3.71). If the monetary base is $94 billion and nominal income is $4.5 trillion, the equilibrium interest rate will be %. (Round your response to two decimal places.)