About money supply and reserve ratio
Course:- Business Economics
Reference No.:- EM13795745

Assignment Help
Assignment Help >> Business Economics

1. Due to limited borrowing options, the government may ask the central bank to print money. We also learned that the real seinorage revenue of the government depends on inflation and real money holding of the public, that is R= \prodM/P?.

a) Explain the circumstances under which of the following statement is true about money supply and reserve ratio?

b) Explain the circumstances under which the government cannot generate seinorage revenue by printing money. You must use diagrams to support your answer.

2. This question is regarding the effects of expansionary fiscal policy on domestic macroeconomic variables in an open economy. Suppose the country is initially in equilibrium at point E with the intersection of the IS curve, the LM curve, and the FE curve.

a) Explain how an increase in government spending will affect the IS, LM, and FE curves. Use a diagram to explain your answer. How will the following key macroeconomic variables be affected? Explain your answer using the diagram.

i. gross domestic product

ii. interest rates

iii. prices

iv. exchange rates

v. net exports

b) how the results are in an open economy different compare to the results in a closed economy?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Compare the unemployment rate in the state of New Jersey to the national average of the past four years. Compare the trends in relation to the types of unemployed workers in t
The following shows the demands and marginal revenue in two markets, 1 and 2, for a price discriminating firm along with total marginal revenue, MRT, and marginal cost MC: Com
If an industrial process emits a pollutant, is it more efficient to monitor the amount of pollutant emitted by each firm and establish a tax per unit of pollutant, or to
Cassiopeia is a country facing an acute financial crisis. Coupled with a negative growth? rate, the rate of inflation in the economy has increased to almost 12 percent. The go
How does model analysis compare to cost benefit analysis regarding transportation planning? What political elements are involved with transportation planning for cities? Would
Consider the following mutually exclusive alternatives: Each alternative has a 5-year useful life and no salvage value. The MARR is 10%. Which alternative should be selected i
What is the relationship of the business cycle between Canada or Mexico with the U.S. business cycle? What about the relationship of South Africa with the U.S. business cycle?
Indicate the different ways an individual could forecast his or her weight 10 years from now. Do these methods change based upon whether the individual is 5, 14, 24, or 45 yea