User Account

All Pages

Cost to the public of the inflation tax

Assignment Help Macroeconomics
Reference no: EM131159934

Consider an economy that has the following monetary data:

Currency in circulation=$300

Bank reserves=$50

Monetary base=$350

Deposits=$700

Money supply=$1000

The monetary base and the money supply are expected to grow at a constant rate of 20% per year. Inflation and expected inflation are 20% per year. Suppose that bank reserves and currency pay no interest, all currency is held by the public, and bank deposits pay no interest.

a. What is the cost to the public of the inflation tax?

b. What is the nominal value of seignorage over the year?

c. What is the profit to the banks from the inflation?

Reference no: EM131159934

Questions Cloud

Which business functions will impacted by your action plan : Which business functions will be impacted by your action plan? What tactics will you use to manage implementation across business functions? What can you do to enhance collaboration/cross-functionality to ensure the success of your plan
Define distribution oil in north africa and southwest asia : Describe British influence over South Asia from the 18th century through the 20th century. Detail the geopolitical framework the departure of colonial empire left in place and discuss any major conflicts resulting from Partition.
What elements must be in place for formation of a contract : What elements must be in place for formation of a contract? What are three examples of valid consideration? The Uniform Commercial Code generally regulates commerce or trade on a national basis.
Benefits are reduced dollar for dollar with any labor income : Suppose you are a single mother with two children living in Oregon, which has (actually, it used to have, but let’s ignore that) a TANF maximum guaranteed benefit of $460 per month. If you work, you earn $5/hour. You have no non-labor income. Suppose..
Cost to the public of the inflation tax : a. What is the cost to the public of the inflation tax? b. What is the nominal value of seignorage over the year? c. What is the profit to the banks from the inflation?
What is stylistic evidence : Defining Terms Based on the readings- What is Stylistic Evidence? -  What is Personal Style? -  What is Iconography.
Would you have approached the challenge differently : Provide an example of a challenge you have experienced in the workplace leading a cross-functional team or as part of a cross-functional team. How was this challenge solved? Would you have approached the challenge differently
How do you interact with the environment on a daily basis : What does the environment mean to you? How do you interact with the environment on a daily basis? How does the environment affect you?
What is the imf overall outlook for south korea : What is the IMF's overall outlook for South Korea? What impact will the condition of the global economy have on the country? What are the domestic risks facing South Korea

Reviews

Write a Review

Macroeconomics Questions & Answers

  Explain how to reduce the impact of an event in the future

The child of a customer, left in a running vehicle, manages to shift the car into forward and it plows through the front of your store, sending debris and stock flying, and causing an indeterminate amount of damage to your facility.

  What option does the central bank have to stimulate economy

If the economy is currently in a long-run equilibrium and the central bank increases the money supply, what effect does this have on the aggregate price level Explain why it is important to insulate central bankers from politic..

  Given that the annual average growth rate of potential gdp

given that the annual average growth rate of potential gdp is 6.48. suppose the economy grows 0.5year faster than at

  The velocity of money is equal to pq/m

The velocity of money is equal to PQ/M. Hence, V = PQ/M. This is related to the equation of exchange and is just a rearrangement of the equation MV = PQ.    a. true    b. false

  Explain fully what product differentiation may involve

How does monopolistic competition differ from pure competition in its basic characteristics From pure monopoly? Explain fully what product differentiation may involve. Explain how the entry of firms into its industry affects the demand curve facin..

  Auger busy in a promotional campaign costing

Auger busy in a promotional campaign costing $60 million this year, its annual after-tax cash flow over the next five years will be.

  How much is the new y in the goods market equilibrium

Continue to assume that C = 400 + 0.75 (Y - 100), I = 100, and NX = 100. But the government now increases spending from 100 to 150, how much is the new Y in the goods market equilibrium?

  Service regardless of the number of calls made

Provider B does not have a fixed service fee but instead chaarges $1 per minute for calls. Your friend's monthly demand for minutes of calling is given by the equation Qd= 150-50P is the price of the minute?

  What are two other ways swatch might hedge

Assuming that SWATCH needs to cover its expenses in Switzerland and thus wants to hedge its SF exposure using a forward contract with a Swiss bank in the US, what is the minimum amount of SF.

  What are the assets

Balance sheet: equipment = 500, inventories 100, receivables70, payables = 50, debt = 300

  How many hours does it take for ethan to make one chair

Ethan works 10 hours a day and produces two goods, tables (T) and chairs (C). His individual PPF curve per day is given by the function:  T=8-2C Given this information and holding everything else constant, how many hours does it take for Ethan to mak..

  If a monopolist is creating a level of output

If a monopolist is creating a level of output at which demand is inelastic and the firm is not maximizing profits.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd