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Dubya make a decision to deposit $5,000 of his cash holdings in Wachovia. The required reserve ratio is set at 10 percent or .10 and the bank does not hold any excess reserves.
a. What is the immediate effect on his deposit on the banking system? Explain.
b. What is the maximum amount of money that Wachovia could loan out? Explain how you determined this amount.
c. What is the maximum of money that the entire banking system can create? Explain how you determined this amount. Show your work.
d. Given one reason why the money supply may not increase in the amount that you have identified in part c.
2. Define the following terms and explain their importance to the study of macroeconomics:
a.money
b.M1
c.Equation of Exchange
d.Money multiplier
3. How does an open market purchase by the Fed affect the level of bank reserves and the interest rate? That is the FED decided to increase the money supply. Illustrate the interest rate effect by drawing the money market graph. What happens to the quantity of money?
The table given below shows the values of two goods. Assume wheat is produced in the United State and coffee beans are produced in Kenya.
ssume under a system of flexible exchange rates a black and white TV rates $150 in the United State and 18,600 yen in Japan. Other things being equal,
Consider two Countries that share the same technology, South Africa and the UK, and two goods, Diamonds and Tea
In the value process, the estimation of the has historically been somewhat neglected in relation to the other steps in the process.
Which political system describes best the governance system of the EU? Is the governance system of the EU democratic? Why ‘yes', or why ‘not'?
Assume the exchange rate between United State, dollars and the Swiss franc was SFr1.6=$1, and the exchange rate between United State dollars and British pound was L1=$1.50.
Following are parameters for an open economy open economy where C=10+.8(y-T); I=10 G=10 T=10 and imports and exports are given by IM=.3Y and X=.3Y* respectively where Y is foreign output.
Following the reduce in the demand for the Baht, has the Baht appreciated or depreciated in relation to the United State dollar?
Assume that both the stock market and housing prices fall in the United State 1st, describe the channels through which these shocks affect aggregate demand for goods and services.
Determine the effects of one country pursuing expansionary fiscal policy and tight monetary policy?
Discuss how do government bureaus differ from private firms and explain why is there good reason to believe that bureaucrats will seek to supply more than efficient level of their output in any year?
A United State Company, has a subsidiary in Europe. it is deciding whether to invest $2 million of its (the parent company) funds in a 3 year project in Europe.
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