Determine in detail about money supply of central bank, Macroeconomics

Assignment Help:

Determine in detail about money supply of Central bank

The central bank will not pay cash when it buys government securities. Instead, it will ask the seller's bank to credit the individual's account and will then credit the bank's central bank account. This procedure is equivalent to paying in cash - the monetary base will increase by the same amount in both cases (remember that the banks' assets in the central bank are included in the monetary base).

Since this will lead to an increase in deposits in the banks, the money supply will increase. By the multiplier effect, the increases in the money supply will be more than 100 million. This way, the central bank can influence the money supply several-fold by changing the monetary base.

 


Related Discussions:- Determine in detail about money supply of central bank

Reciprocal demand, what are the factors effecting reciprocal demand?

what are the factors effecting reciprocal demand?

Equilibrium in the money market, Equilibrium in the money market  ...

Equilibrium in the money market  In the IS-LM-model, we have equilibrium in the money market when MD(Y, R) = MS   This is the equation

Makers respond to the crisis monetary policy, Did monetary policy contribut...

Did monetary policy contribute to the economic crisis of 2008? Why or why not? How did monetary policy makers respond to the crisis? Has their response created an environment for f

Introduce about the open-economy macroeconomics shortly, Introduce about th...

Introduce about the open-economy macroeconomics shortly. The Open Economy: a. One of the major concerns introduced through open-economy macroeconomics is the exchange rat

What are forms of price floors to lead inefficiency, What are forms of pric...

What are forms of price floors to lead inefficiency? Price floors frequently lead to ineffectiveness in the forms of: a. Inefficient allocation of sales in between sellers

Protectionisms, definition, argument to protectionism and argument against ...

definition, argument to protectionism and argument against protectionisms

Per year interest rate, For an interest rate of 12% per year compounded con...

For an interest rate of 12% per year compounded continuously, find (a) the nominal rate per year, (b) the nominal rate per quarter, (c) the effective rate per quarter, and (d) the

Determine the cross elasticity demand for margarine, Question 1: (a) D...

Question 1: (a) Distinguish between the short run and long run profits of a competitive firm by using graphical representations. (b) Compare and contrast between perfect c

Internal market forces, what are some internal market forces and how is the...

what are some internal market forces and how is the outcome of output, jobs, prices, growth, and international balance

Foreign trade, how can a country maintain equilibrium GDP with foreign trad...

how can a country maintain equilibrium GDP with foreign trade?

Write Your Message!

Captcha
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