Question 2 is attatched. Asking for an answer for question 4 **Question 4**Consider the economy described in question 2. If the Fed prints $80 of additional currency and all of this extra money is held by households under mattresses, then money supply will go up by _____ percent.*Note: Type in your answer rounded to two decimal places, i.e., your answer must be of the form “999.99”. I will not be able to fix correct answers that were entered incorrectly, such as “999.999” or “999,99” or “999”. In case the last digit in the correct answer is zero, e.g., “999.90” or “999.00”, Blackboard may automatically delete it and you should not do anything about it. In case of percentages, do not type in the percentage symbol “%”. If your answer is a negative number, type a dash in front of your answer, i.e., “-999.99”.*[Text Box for Answer Entry] **Question 2**Suppose that for every open-market operation in the amount of $1, the money supply increases by $3, i.e., an open-market purchase of $1 will increase the money supply by $3, and an open-market sale of $1 will reduce the money supply by $3. This means that the money multiplier is fixed and is equal to 3. The Fed's balance sheet is as shown below:**Federal Reserve Bank**- **Assets** - Securities: $900 - Gold: $100 - **Total assets**: $1000- **Liabilities** - Currency held by nonbank public: $700 - Vault cash held by banks: $100 - Reserve deposits: $200 - **Total liabilities**: $1000The commercial banks’ balance sheet is as follows:**Consolidated Balance Sheet of Banks**- **Assets** - Vault cash: $100 - Reserve deposits: $200 - Loans: $2700 - **Total assets**: $3000- **Liabilities** - Deposits: $3000 - **Total liabilities**: $3000If the Fed wants to increase the money supply by 15%, then it has to buy government bonds in the amount of ______.**Note:** Type in your answer rounded to two decimal places, i.e., your answer must be of the form “999.99”. I will not be able to fix correct answers that were entered incorrectly, such as “999.999” or “999,99” or “999”. In case the last digit in the correct answer is zero, e.g., “999.90” or “999.00”, Blackboard may automatically delete it and you should not do anything about it. In the case of percentages, do not type in the percentage symbol “%”. If your answer is a negative number, type a dash in front of your answer, i.e., “-999.99”.

The entire amount of money owned by the public at any given time in an economy is referred to as the…

Answered: Consider the economy described in…

Consider the economy described in question 2. If the Fed prints $80 of additional currency and all of this extra money is held by households under mattresses, then money supply will go up by percent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Question 2 is attatched. Asking for an answer for question 4

**Question 2**

Suppose that for every open-market operation in the amount of $1, the money supply increases by $3, i.e., an open-market purchase of $1 will increase the money supply by $3, and an open-market sale of $1 will reduce the money supply by $3. This means that the money multiplier is fixed and is equal to 3. The Fed's balance sheet is as shown below:

**Federal Reserve Bank**

- **Assets**
- Securities: $900
- Gold: $100
- **Total assets**: $1000

- **Liabilities**
- Currency held by nonbank public: $700
- Vault cash held by banks: $100
- Reserve deposits: $200
- **Total liabilities**: $1000

The commercial banks’ balance sheet is as follows:

**Consolidated Balance Sheet of Banks**

- **Assets**
- Vault cash: $100
- Reserve deposits: $200
- Loans: $2700
- **Total assets**: $3000

- **Liabilities**
- Deposits: $3000
- **Total liabilities**: $3000

If the Fed wants to increase the money supply by 15%, then it has to buy government bonds in the amount of ______.

**Note:** Type in your answer rounded to two decimal places, i.e., your answer must be of the form “999.99”. I will not be able to fix correct answers that were entered incorrectly, such as “999.999” or “999,99” or “999”. In case the last digit in the correct answer is zero, e.g., “999.90” or “999.00”, Blackboard may automatically delete it and you should not do anything about it. In the case of percentages, do not type in the percentage symbol “%”. If your answer is a negative number, type a dash in front of your answer, i.e., “-999.99”.

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