the core of macroeconomics, Macroeconomics

Suppose in the Republic of Madison that the regulation of banking
rested with the Madison Congress, including the determination of
the reserve ratio. The Central Bank of Madison is charged with regulating
the money supply by using open market operations. In
April 2011, the money supply was estimated to be 52 million hurls.
At the same time, bank reserves were 6.24 million hurls and the
reserve requirement was 12 percent. The banking industry, being
“loaned up,” lobbied the Congress to cut the reserve ratio. The
Congress yielded and cut required reserves to 10 percent.What is
the potential impact on the money supply? Suppose the central
bank decided that the money supply should not be increased. What
countermeasures could it take to prevent the Congress from
expanding the money supply?
Posted Date: 10/28/2014 10:05:17 AM | Location : Indonesia







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