Complete the numbered boxes on the following table, by writing the word or words needed to accurately complete the table for each of the numbered boxes. Write your answers in the space provided below Easy Money (expansion) Central Bank Policy Set Interest Rates 1 XXXX Manage Foreign Reserves 2 Control Money Supply Set the Reserve Ratio XXXX 4 Tight Money (contraction) XXXXX

Complete the numbered boxes on the following table, by writing the word or words needed to accurately complete the table for each of the numbered boxes. Write your answers in the space provided below Easy Money (expansion) Central Bank Policy Set Interest Rates 1 XXXX Manage Foreign Reserves 2 Control Money Supply Set the Reserve Ratio XXXX 4 Tight Money (contraction) XXXXX

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Explain how to use an open market operation to expand the money supply.
part-c: Suppose I live in a hypothetical country, Pandesia, where there is 100% reserve banking. I deposit $1,000 in a checking account at the 1st National Bank of Pandesia. Using the T-account (ie: assets on the left and liabilities on the right), explain whether / how my deposit changes the money supply in Pandesia. DON'T ANSWER PART C Just use part c to answer D part-d: Now suppose the Central Bank of Pandesia (CBP) decides that after centuries of 100% reserve banking, it is time for a change and decide to switch the Pandesian banking system to fractional reserve banking. To begin with, board of governors at the CBP agree on a required reserve ratio of 10%. How does my deposit of $1,000 at the 1st National Bank of Pandesia impact the money supply in Pandesia after this change? Explain by using the T-account. part-e: Next suppose that Pandesian economy enters a recession. To fight against the unemployment created by the recession, CBP decides to expand the Pandesian money supply.…
The Island Nation of Murlonio prints its own currency called the Mariano. Use the data below to calculate the M2 measure of the money supply. Source Amount Cash in circulation $2,464 Vault cash held in bank reserves $503 Checking deposits $34,133 Savings deposits $39,233 Treasury Bills, Notes, and Bonds $48,020 Certificates of Deposit (under $100,000) $36,983 Individual Money Market Accounts $28,471 Corporate Bonds $35,823 Do not round your answer.
The Island Nation of Murlonio prints its own currency called the Mariano. Use the data below to calculate the M1 measure of the money supply. Source Amount Cash in circulation $2,055 Vault cash held in bank reserves $532 Checking deposits $22,067 Savings deposits $22,005 Treasury Bills, Notes, and Bonds $40,249 Certificates of Deposit (under $100,000) $33,438 Individual Money Market Accounts $33,706 Corporate Bonds $31,735 Do not round your answer.
The table shows the components of money supply: Item Billions of dollars Small time deposits 630 Large time deposits 645 Money market deposit accounts 575 Money market mutual funds 425 Checkable deposits 448 Noncheckable savings deposits 300 Currency 170 Estimate the following: M1 M2
Question The table below shows the components of M1 and M2 in the U.S. Use the table to calculate Total M1. Round to the nearest third decimal place. Provide your answer below: trillion Components of M1 and M2 in the U.S. Currency Traveler's checks Demand deposits and other checking accounts Savings accounts Time deposits Individual money market mutual fund balances $ trillions $1.2 $0.004 $2.204 $9.805 $0.527 $1.176
If the Bank of Canada has an interest-rate target, what will happen to the money supply if the demand for reserves increases? Use a graph of the market for reserves to explain.
If $5000 is deposited into a bank with a reserve ratio of 5%: 1. How much will the total money supply increase? 2. How much "new money" will be created?
In the U.S., currency in circulation (C) is $1.2 trillion and the monetary base (B) is $3.7 trillion. Assume the reserve-deposit ratio (rr) and the currency-deposit ratio (cr) are both 0.25. What is the size of bank reserves (R)? What is the money multiplier? What is the money supply? What is the velocity of money if nominal GDP is $17 trillion? If the FOMC increases bank reserves (R) by $0.5 trillion and banks choose to hold all the additional reserves rather than loan them out, what is the new money supply? What is the new money supply if instead banks loan out 50% of the additional new reserves and households deposit all the additional loans? Assume that the velocity of money is constant and real GDP is growing at 1%. Use the numbers in part (a) to answer the next question. If the Fed wishes to keep the price level constant, how much (in dollars) do they need to increase the money supply?
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The reserve requirement, open market operations, and the money supply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is checkable deposits. To simplify the analysis, suppose the banking system has total reserves of $500. Determine the simple money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) (Dollars) 5 10 A lower reserve requirement is associated with a ______(SMALLER/LARGER) money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Again, you can assume that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to _____(BUY/SELL)$ ________ worth of U.S. government bonds. Now, suppose that, rather than…
Use the following table to determine the levels of M1 and M2 in the United States. Money Categories in the United States Asset Amount (billions of dollars) Currency $84 Demand deposits 81 Money market funds 45 Other checkable deposits 38 Savings deposits 466 Small time deposits 23 Traveler's checks 5 Instructions: Enter your answers as a whole number. a. Calculate the M1 money supply. $ billion b. Calculate the M2 money supply. $ billion