What happens to the money supply

Assignment Help Business Economics
Reference no: EM131102579

1. Identify whether the following items are counted in M1 only, M2 only, both M1 and M2, or neither:

A) A $1,000 balance in a checking account at a mutual savings bank

B) A $100,000 certificate of deposit issued by a New York bank.

C) A $10,000 time deposit an elderly widow holds at her credit union.

D) A $50 traveler's check

E) A $50,000 money market deposit account balance

2. Suppose Bob digs up a box in his front yard that contains $1000.

A) Would anything happen to the money supply (M1)? Explain

B) What would happen to the money supply when Bob deposits this in a bank (reserve-deposit ratio is .05)? What is the maximum amount of money that can be created? How does this occur?

3. A month later, Bob buys a $1000 government bond from the Fed with this money.

A) What happens to the money supply (M1)? Does it increase or decrease? By how much?

B) How would this impact Bob's future spending? Would it increase or decrease?

C) Under what circumstances would Bob be likely to buy bonds ? (describe the economy, his perceptions)

D) 5 years later Bob sells the bond for $1000 and buys $1000 in common stock. Describe the differences in Bob's investment portfolio. (how does it differ; what are the risks; what are his returns)

Reference no: EM131102579

Questions Cloud

What position would the opposing school of thought take : Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue?
Account when planning its marketing strategy : The Toyota Prius broke open the market for hybrid cars. How did Toyota's rivals react to the introduction and success of the Prius? What evidence is there that Toyota has taken rivals' reaction into account when planning its marketing strategy?
Show that it satisfies nyquist''s pulse-shaping criterion : By appropriate sketches, show that it satisfies Nyquist's pulse-shaping criterion.
Things mary can do to develop her diversity consciousness : EDUC-3008-1 Diversity in Education - Michael expresses the concern that his son's life is culturally isolated or encapsulated. Do you agree? Why and how might Aaron's education influence his diversity consciousness?
What happens to the money supply : Identify whether the following items are counted in M1 only, M2 only, both M1 and M2, or neither: Suppose Bob digs up a box in his front yard that contains $1000. A month later, Bob buys a $1000 government bond from the Fed with this money. What happ..
Identify a minimum of ten examples of fallacies : Choose one or two of the articles linked below to analyze. You can use as many articles as you need, but one is all that is required. Identify as many logical fallacies as you can within the text.
How your redesigns make the graphic better or worse : For the bad graphic, redesign it to make it better, so that its meaning is clearer or more appropriate. For the good graphic, redesign it to make it worse, so that its meaning is less clear or less appropriate. Explain briefly (in a few sentences) ..
Difference between layering and data hiding : In your own words, describe the concept of ring protection. What is the difference between Layering and data hiding?
Has dollar appreciate or depreciate in value relative to yen : Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why? Has the dollar appreciated or depreciated in value relative to the yen?

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd