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
Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. This is not particularly realistic, for reasons discussed
Suppose that the demand curve for wheat is q = 100 - 10p and the supply curve is q = 10p. the government imposes a price support at p = 6 using a deficiency payment program. W
What are financial intermediaries and what do they do. What information problems exist in financial relationships and how do financial intermediaries help solve them.
Choose a firm that sells their products through more than one channel of distribution. (For example, Miller beer is sold through grocery stores, convenience stores, liquor sto
You are the manager of a firm that receives revenues of $60,000 per year from product X and $90,000 per year from product Y. The own price elasticity of demand for product X i
Using a supply-demand diagram, show a labor market with a binding minimum wage. Now, use the diagram to show those who are helped by the minimum wage, and those who are hurt b
Compare the automotive manufacturing industry today to the automotive manufacturing industry of the 1950's. Applying the economics of price and output, what is the differenc
What is the necessary requirement to turn a business idea into a business? If you don't have customers willing to buy your new product or service at a price that gives you a p