What is the money supply in economy

Assignment Help Business Economics
Reference no: EM133067304

An economy with $3 trillion in checkuable deposits, $191 billion in desired reserves and $88 billion in excess reserves. Currency in circulation is $959 billion.

1. What is the money supply in this economy?

2. Calculate the currency deposit ratio and the excess reserve ratio

3. What is the money multiplier in this economy? 

 

Suppose the central bank conducts an open market purchase. Specifically, the central bank purchases $21 billion of government bonds held by banks.

4.  If the ratios calculated in question 1 remain unchanged, what do you predict will
be the effect on this economy's money supply?

 

5. Consider the same open market purchase as in question 4, except that banks choose to hold all of these proceeds as excess reserves instead of making loans. Assuming that currency and deposits remain the same, what happens to the excess reserve ratio and the money multiplier

Reference no: EM133067304

Questions Cloud

Reduce global greenhouse gas emissions : Given its poor economy, can the Bangladesh government sustain the costs of going green? Please provide citations.
Explain the role of an organization reputation : Explain the role of an organization's reputation in achieving its mission and vision.
Initiatives on the quality of care delivered : A review of the quality initiatives that have been developed in recent years and the impact of the initiatives on the quality of care delivered.
How can we arrive at solution : This game focuses our attention on the socially optimal choice and the Nash Equilibrium. By using a Coase Solution, it may be possible to reach the optimal solu
What is the money supply in economy : An economy with $3 trillion in checkuable deposits, $191 billion in desired reserves and $88 billion in excess reserves. Currency in circulation is $959 billion
Knowledge-based management systems : Knowledge-Based Management (KBM) Systems allows for the health organization to employ new methods of processing and analyzing knowledge.
How the shift from deposits into currency affects : In December the public wants to hold more currency to buy gifts and make donations to local charities and so withdraws cash from their bank accounts.
Design your own resturant : Create a concept or theme for your restaurant. Identify the key aspects of your concept or theme, the ownership type, and the restaurant type.
Provide economic intuition for the direction : Provide economic intuition for the direction of the change in each of the variables in Row 1-5 of Table 2 in moving from Column 2 to Column 3.

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