Given W=180 b=0.75 G=90 Tax=90 NX=-50 I=300-10r Central bank reserves are Gold=100 f. currencies 200 l.currencies 150 t-bills 500 RRR=0.2 MD=5000-50r Calculate the equilibrium GDP (y). If Ypot=1700 by how much should the central bank change the RRR to attain potential If instead the central bank will involves open market operations in order to attain potential. By how much should it increase or decrease t-bills.
Functions of the Federal Reserve System
The Federal Reserve System looks after the financial activities and operations of the banking system. It is the apex body that has complete control over the banking regulations. All the guidelines regarding the banking system, money supply, and formulation of the monetary policy come under the purview of the Federal Reserve System. The New York Fed also helps in drafting the monetary policy and supervising the financial system.
Elastic and Inelastic Markets
Measuring the change in percentage of an economic variable with respect to change in a different economic variable is known as elasticity. This change in percentage results in a change in price concerning changes in other factors. In simple terms, when one factor brings a change to another factor, it is called elasticity.
Given
W=180
b=0.75
G=90
Tax=90
NX=-50
I=300-10r
Central bank reserves are
Gold=100
f. currencies 200
l.currencies 150
t-bills 500
RRR=0.2
MD=5000-50r
Calculate the equilibrium
If Ypot=1700 by how much should the central bank change the RRR to attain potential
If instead the central bank will involves open market operations in order to attain potential. By how much should it increase or decrease t-bills.
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