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Changes in Monetary Policy
Prepare a 2-3 page analysis by answering the questions below. Be sure to cite your references using APA format.
Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place:
Balance Sheet for Ecoville International Bank
ASSETS
LIABILITIES
Cash
$33,000
Demand Deposits
$99,000
Loans
66,000
Required:
Now assume that the Fed lowers the reserve requirement to 8%.
Discuss the reason why governments might want to intervene and how they might do- with respect to the following "problem" in the functioning of an otherwise perfectly-competitive ("pareto-efficient") economy:
Consider the following production function: Y = AK^aL^(1-a), where Y is units of output, K is units of capital, and L is units of labor. Both A and are constant parameters characterizing the production technology.
During the most recent recession General Motors and Chrysler lost huge sums of money in their operation (not counting government bailout money they could not assume they would get). How could they continue to operate at a loss
Elucidate action in the open market would the Fed have to take to prevent bank reserves from falling.
Illustrtae what are the different incentives that investors have to hold TIPS.
Jason is indifferent between $10 for sure and a lottery that pays $100 with probability 0.09 and $0 with probability 0.91. He is also indifferent between $70 for sure and a lottery that pays $100 with probability 0.80 and $0 with probability 0.20.
What is the "current macroeconomic situation" in the U.S. (e.g. is the U.S. economy currently concerned about unemployment, inflation, recession, etc.) What fiscal policies and monetary policies would be appropriate at this time
Explain the cultural, political, and economic reasons behind these policies also explain the methods governments use to promote and restrict international trade
Assume demand shifts out to the right by 10 percent, the elasticity demand is 1.5 and the elasticity of supply is .5, By how much will price change.
Elucidate how each of the following will affect the consumption and saving schedules (as they relate to GDP) or the investment schedule.
1. let the gdp of an island be y 5000 its consumption given by the equation c 1200 frac34 y-t its investment i 1500
The park service wants to restrict the number of visitors to Yellowstone National Park to Q*,which is fewer than the current number of visitors. It considers two policies: (i) raise the price of admissions, or (ii) set a quota. Compare the effec..
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