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Determine the initial levels of kdd

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Reference no: EM132404718

In answering the following questions, round all dollar amounts to the nearest dollar. Round the multipliers and parameter values to 3 decimal places. (Note: Answers will rarely work out to be even numbers.)

1. Assume initially that: Curr = $1,440 c = .24 r = .05 total reserves = $900 M2 = $32,040 MMMF = $3,000

Determine the initial levels of: kdd, kM1, kM2, DD, RR, ER, MB, TD, and M1. (1 ea.)

2. Determine the effect on MB, M1, M2, Currency, DD, ER, RR, TD, kM1, and kM2 if the excess reserves to DD ratio becomes .50. (1 ea.)

3. Quantify (state value and direction) the open market operation that would be necessary to reverse the change in M1 that occurs in question #2? (5)

Reference no: EM132404718

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