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Consider an economy in which people wish to hold bank checking deposits worth a total of 5 million goods and currency worth 2 million goods in every period. In addition there is a stock of unintermediated capital worth 10 million goods. Fiat money is the only asset used as currency. Deposits at banks are subject to a reserve requirement of 20 percent. After meeting the reserve requirement, banks invest the remainder of all deposits into capital. The monetary base is $1 millon. Hint: The key to this exercise is understanding the difference between inside and outside money. a. Find the value (in goods) of a dollar. b. Find the total nominal money stock as measured by the Federal Reserve's definition of M1. c. Find the money multiplier. d. Find the total capital stock. e. Find the revenue (in goods) from seignorage if the monetary base triples every period. f. Suppose people want to keep more of their money balances in the form of cash, although their total demand for money does not change. What will happen to each of your answers to part a to e?
What were the 2 principal successful policies adopted by Franklin Roosevelt that brought an end to the Great Depression? How does the Federal Open Market Committee dier from the Board of Governors in terms of their composition and responsibilities fo..
Describe how the Federal Reserve is able to control the federal funds rate fairly closely and why this enables the Federal Reserve to have such good control over ALL short-term money market interest rates. Refer to changes in the Federal Reserve's ba..
Which of the following is true for a market with no externalities under perfect competition? Which of these is a property of public goods?
Write each production function given below in terms of output per person y ≡ Y/L and capital per person k ≡ K/L. Plot these per person versions in a graph with y on the vertical axis and k on the horizontal axis. (You can assume A is a constant posit..
Identify a company in your local or generalized area that you would classify as a monopoly - Explain the key reasons why you classified the company as a monopoly.
Consider the following distribution of income in a 12 person economy, with the modern urban wage=3, the traditional rural income=1 and the informal urban wage = 2: (1,2,3,1,2,3,1,2,31,2,1). the poverty line is at 1.3. What is the level of absolute po..
For each of the following shocks, describe how monetary policymakers would respond (if at all) to stabilize economic activity. Assume the economy starts at a long-run equilibrium.
What are all producers assumed to maximize?
q.a young physician makes 180000 per year with an annual salary increase of 2. he is interested in buying a house. he
The impact of a catastrophic failure can be the difference between making and breaking an organization. Many government agencies and enterprise organizations practice full-scale recovery. RIM / Blackberry suffered a major catastrophic failure in i..
New buses for a mass-transit agency cost $10 million and are expected to last for 10 years with a $1 million salvage value. The buses cost $500,000 to operate and maintain each year. If the system is used for 624,318 trips per year, with the average ..
Would this have been the result of a change in Demand? If so, why; if not, why not? If not, what was the probable reason?
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