Q1 suppose the general public purchase 500 million in

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Reference no: EM13354300

Q1. Suppose the general public purchase $500 million in government bonds and pay for them by drawing cheques on their chartered bank deposits.

(i) Calculate the (target) reserve requirement.

Q2. If the economy currently has a frictional unemployment rate of 2% structural unemployment of 2%, seasonal unemployment of 0.5%, and cyclical unemployment of 2%, what is the natural rate of joblessness? Explain where is the economy operating relative to its potential GDP?

Reference no: EM13354300

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