What happens in the long run to the money supply if the public, other than banks, does not add to its currency holdings and the banks do not keep more than the desired reserves? -Will total credit in the economy expand or contract and by how much? Justify your answer. -Also, did the central bank’s purchase happened during a recession or an expansion?

Q: Suppose that Rina makes a new cash deposit of $85,000 at her bank. Suppose that the bank is required…

A: Money kept in a bank is referred to as a deposit in the world of finance. A deposit is a deal in…

Q: Suppose the banks in an economy have a reserve-deposit ratio of 10 percent and the currencydeposit…

A: Let the initial monetary base is H0 Central bank increase the monetary base by $400, then a new…

Q: 4. Here is the expression for money market equilibrium that we discussed in class: M = P. L(Y,r +…

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Q: What is an implication of the neutrality of money in the long run?     The economy's level of…

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Q: Assume that the monetary base (B) is $100 billion, the reserve-deposit ratio (m) is 0.1, and the…

A:

Q: Suppose that this year's money supply is $1,200 billion, nominal GDP is $6,000 billion and real GDP…

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Q: Suppose that the Central Bank has currently set the reserve requirements in the economy to be equal…

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Q: Suppose the ratio of deposits that banks hold in the form of reserves is 7 percent. Suppose further…

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Q: 24.   If the economy is at potential output, and the Fed increases the money supply, in the short…

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Q: 1. Suppose that initially the money supply (M1) of the economy is made up of $1,000. a. If people…

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A: Given, Money in terms of Cash = $20 million Required Reserve Ratio = 5% Reserves = $20 million

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Q: 8. The reserve requirement, open market operations, and the moneysupply Consider a system of banking…

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Q: Suppose the Fed decided to sell $100 billion worth of government securities in the open market.…

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Q: Suppose that the reserve requirement for checking deposits is 10 percent and that banks do not have…

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Q: Suppose that Continental Bank has the simplified balance sheet shown below and that the reserve…

A: Solution: Note: "Sorry" Since you have posted a question with multiple sub-parts. I will do only…