opulation growth mproved health and nutrition enforcement of property rights increased educational attainment political stability estion 31 -sume the RRR is 8% and that the deposit creation multiplier works as described in class (i.es implified" deposit creation multiplier). What will be the total of deposits in the banking syst sulting from an initial deposit of $1.000?
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- The values of total deposit and initial deposit are $3000 million and $640 million Calculate multiplier1. Suppose that the reserve requirement for chequing deposits is 15 % and the banks donot hold any excess reserves. What is the effect on the economy’s reserves and themoney multiplier if the central bank sells $2 million of government bonds? 2. Now suppose the central bank lowers the reserves requirement to 5%, but the Savers’banks choose to hold another 5% deposits as excess reserves. State two reasons whythe Savers’ bank want to hold excess reserves. 3. Analyse briefly the impact of the overall change in the money multiplier and the moneysupply as a result of the policies implemented by the Savers’ bank.Calculate the value of money multiplier and total deposit created if initial deposit is of $500 million and the LRR is 10%
- 16. Suppose that the Federal Reserve conducts an open market operation in which it purchases $100 in US Treasury bonds from a private saver. (a) In an economy without banks, by how much, in dollar terms, will the total money supply increase as a result of this open market operation? (b) In an economy with banks in which all members of the nonbank public immedi- ately deposit all of the currency they receive, but in which all banks engage in 100 percent reserve banking, by how much will the total money supply increase as a result of this open market operation? (c) In an economy with banks, in which all banks choose a 10% reserve ratio and in which all members of the nonbank public immediately deposit all of the currency they receive, by how much will the total money supply increase as a result of this open market operation? (d) In an economy with banks, in which all banks choose a 10% reserve ratio, but in which all members of the nonbank public hold 50% of the funds they receive as…Suppose a researcher discovers that a measure of thetotal amount of debt in the U.S. economy over thepast 20 years was a better predictor of inflation andthe business cycle than M1 or M2. Does this discoverymean that we should define money as equal to the totalamount of debt in the economy?Assuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the two banks as at 2019.Classic BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 1,000 Deposits 3,000Securities 2,000 Equity 7,000Loans & Advances 1,000Property, Plant and Equipment 6,000 .10,000 10,000 Prudent BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 600 Deposits 2,500Securities 1,500 Equity 4,400Loans & Advances 800Property, Plant and Equipment 4,000 .6,900 6,900Assume a required reserve ratio of 10%.(a) What is the amount of excess reserves in this commercial banking system? (b)What is the maximum amount that the money supply can be expanded? What would be the effect of a fall in reserve ratio to 5%, on the maximum amount that the money supply can be expanded? (c) Determine the stock of broad money supply assuming the non-bank public holds…
- QUESTION 12 The dollar depreciates by 20 percent against the Euro. Powell should O Increase the monetary base by 20 percent Reduce the monetary base by 18 percent Reduce the moriey 22 percent. Do nothing Not enough information to answer this question QUESTION 13 Banks become more optimistic due to an improvement in the economy. The money multiplier increases by 10 percent. Powell should O Increase the monetary base by 20 percent O Reduce the monetary base by 8 percent O Reduce the money 22 percent O Do nothing O None ofthe above QUESTION 14 President Biden increases the government deficit to 10 percent of GDP. Powell should O Increase the money supply by 10 percent O. Reduce the money supply by 10 percent O Reduce the money supply by 12 percent O Do nothing O We do not have enough information to answer.The central bank of the Dominican Republic decides to pursue acontractionary monetary policy. Provide a table with the money supply data and inflationrate for the Dominican Republic for 2014 - 2019.(c) Based on the data from the Dominican Republic, do you agree with thecentral bank’s decision to pursue a contractionary monetary policy? Explain why orwhy not. (d) Identify a newspaper article from the Dominican Republic that provides asituation in which a contractionary monetary policy was implemented by the centralbank. Ensure that you provide a screenshot of the article in your submission. Thescreenshot should include the name of the publication, date of publication and nameof the article.(i) Identify the contractionary monetary policy used in the article. (ii) Carefully explain, in as much detail as possible, how the chosen action from thearticle will impact the money market. (iii) Illustrate using the money market diagram, the overall impact of the chosen actionfrom the article on…Given the following informations; Consumption(C) 800+0.9Y, Where Y-Income Investment (I) =8000-800r, where r=interest rate Money Supply (Ms) =28500 Demand for Money (Md) =0.75Y-1500r and if the autonomous Investment decreased then %3D income decreased and interest rate increased. income increased and interest rate decreased. O income decreased and interest rate decreased income increased and interest rate increased
- Pls help with this Suppose that the Central Bank has currently set the reserve requirements in the economy to be equal to 10%. Assume that there is no cash drain. Suppose also that in this economy there are $400 in initial deposits and $6,000 of cash. 6. Given the above, what is the total Money Supply (MS) in the economy?Now suppose that the economy’s demand for money (MD) is given by the following equation: ??=12,000−1,000∗rWhere r is the interest rate in integers (e.g. at a 2% interest rate, r = 2). 7. What is the equilibrium quantity of money (M) and interest rate (r) in this economy? Now suppose that the Central Bank wants to close an output gap in the economy, and wants to raise the interest rate by 2% to do this. Assume that the Central Bank targets the Money Supply directly. 8) If the Central Bank wants to change the Money Supply by changing the quantity of cash in the market in order to achieve this interest rate increase, how much does it need to change the quantity of cash?…The income elasticity of money demand is ny = 0.7 and the interest rate elasticity of money demand is nj = -0.02. Suppose that the central bank increases the money supply by 5%, real income increases by 2% and inflation is 3%. What is the percentage increase in the nominal interest rate? O -0.3 (or -30%) O 0.3 (or 30%) O-0.1 (or -10%) O 0.1 (or 10%)a. Explain how institutional factors promote economic growth in these areas promotion of modern technology the flow of resources to the most productive areas. 2.Explain how expansionary fiscal policy works in an economy Suppose that the banking system in Ghana has a required reserve ratio of 10 percent while the banking system in the Ivory Coast has a required reserve ratio of 20 percent. In which country would $100 of initial excess reserves be able to cause a larger total amount of money creation? For the two countries, if an amount of $2000 each are deposited at two separate ban banks in both countries and decides to give $600 as loans, what is the maximum amount of money that can be created in both countries with that deposit 3. With the aid of illustration (s) explain in detail why countries push forspecialization in international trade.