Advanced monetary theory, Microeconomics

Consider a hypothetical ABC economy in which the narrowly-defined measure of the  money supply (M1), as defined in the Canadian sense, in existence is 1250$ million. Assuming the economy's banking system behavior may be characterized by the following simple broad money-multiplier model in which all the variables are as defined in class:

MB= C+RR+ER (equilibrium condition)

C=0.25D (currency holdings of the non-bank public)

RR=RRd+RRt

RRd=0.05D (required reserves against demand deposits)

RRt=0.02T (required reserves against term deposits)

T=0.8D (definition of term deposits)

ER=ERd+ERt

ERd=0.002D (ratio of excess reserves to demand deposits)

ERt=0.001T (ratio of excess reserves to term deposits)

Posted Date: 3/14/2013 5:34:21 AM | Location : United States







Related Discussions:- Advanced monetary theory, Assignment Help, Ask Question on Advanced monetary theory, Get Answer, Expert's Help, Advanced monetary theory Discussions

Write discussion on Advanced monetary theory
Your posts are moderated
Related Questions
In the context of managerial economics how do you explain a rational producer. Illustrate giving example covering different dimention.

RECENT DEVELOPMENT OF DEMAND THEORY:  The basic theory of consumer behaviour discussed in the previous unit can be extended in many directions, and can be applied to cover opt

The production function for a firm is expressed as follows: Q = 800K - K 2 +5KL - 7750L + 10,000 Where Q is quantity of units manufactured, K and L are units of capital and

A recent national survey found that high school students watched an average (mean) of 7.2 DVDs per month with a population standard deviation of .90. A random sample of 35 college

Survey Methods: The most direct method of forecasting demand in the short run is survey method. Surveys are conducted to collect information about future purchase plans of the

What is affected variable and cause variable?  In a graph, one variable is dependant and the other is independent. The dependant variable is known as effect variable and indepe

How to calculate new profit earn by a firm in oligopoly if another firm cheat

Why firm charges different prices to different consumer?  Every firm needs to maximize its profit. When goods are sold to different customers, each customer negotiate price of

Determinants of Social Demand for Education Certain levels of education like the secondary school and graduate level are considered as having productive value and are attribut