Why is money important for an economy

Assignment Help Macroeconomics
Reference no: EM132631719

-Explain the difference between currency and bank money. Which institutions in Canada are responsible for producing these two types of money? Explain fully.

-Why is money important for an economy?

-Suppose that the Bank of Canada sells $2 billion of bonds on the open market. Use the Keynesian transmission mechanism to explain fully how this sale will reduce GDP by $40 billion if the money multiplier is 4 and the income multiplier with respect to the money supply is 5.

-Explain fully why the Monetarist School claims that monetary policy is stronger than fiscal policy in stabilizing the economy to reduce recessions and inflations.

-Implementation of monetary policy is fraught with many pitfalls. One important problem is deciding whether the central bank should target the money supply or target the interest rate. Assuming that the goal is to reduce inflation, explain the primary concern with each of these two different targets.

Reference no: EM132631719

Questions Cloud

About cultural intelligence : Using what you know about cultural intelligence, analyze the situation in terms of national, regional and individual levels.
What happens when the oil runs out : 1. What happens when the oil runs out? 2. Does Unemployment raise when the crisis hits? 3. What happens to Oil Service Stocks?
Potential risk factors are found in every project : Potential risk factors are found in every project. Although individual projects have different risks, there are several common risk factors.
What nursing diagnoses would make : What nursing diagnoses you would make and what interventions you would initiate to address the patient's nutritional status and emotional well-being.
Why is money important for an economy : Explain the difference between currency and bank money. Which institutions in Canada are responsible for producing these two types of money?
Course or learner heading to residency : What tips would you offer to a learner just beginning this course or a learner heading to residency?
What is the value of the multiplier : Assume that the investment function is a linear relation. The relation between investment and output is characterized by two parameters
How do public health officials handle the chronic diseases : Describe two chronic diseases that have plagued your community. How do public health officials handle the chronic diseases? Provide examples
Case of enron and arthur andersen : Identify what you consider any conflicts of interest in the case of Enron and Arthur Andersen.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

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