monetary, Macroeconomics

Assignment Help:

1. Suppose the banking system has reserve of $750000, demand deposits of $2500000 and a reserve requirement of 20%.

a. if the fed now purchases $125,000 worth of govt bonds from the public, what are the excess reserves of the banking system? (Assume the public deposits the entire $125,000 in the demand deposits)
b. How much can the banking system increase the money supply by, given the new reserve position?

c. Using graphs, explain in detail how the change in moneysupply affects investment demand and as a consequence, aggregate demand. What roles does the spending mutliplier play in this process? Explain.

d. What is the impact of the FED''''s actions on GDP, umemployment, and inflation?

Related Discussions:- monetary

What do you mean by multiplier effect, Q. What do you mean by multiplier ef...

Q. What do you mean by multiplier effect? Loans and deposits in banks give rise to a significant multiplier effect. We use a simple instance to explain this effect. Consider th

Determine the degrees of freedom, A biologist working in the Outback of Aus...

A biologist working in the Outback of Australia is studying the effects of land-use by tourists (campers, fishers, etc.) on vegetation cover in a river gorge of the outback. There

Abnormal profits, explain the terms abnormal profits and normal profits

explain the terms abnormal profits and normal profits

Rapidly rises housing prices, Why did housing prices rise rapidly during 20...

Why did housing prices rise rapidly during 2002-2005? Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the 2008-2009 recession began?

Multiplier, concept of multiplier - static and dynamic

concept of multiplier - static and dynamic

How to control monetary policy, Q. How to control Monetary policy? Reme...

Q. How to control Monetary policy? Remember that the money supply is equal to the money multiplier times the monetary base. We will presume that money multiplier is constant an

Wholesale prices, Wholesale Prices, Consumer Prices and Inflation   From...

Wholesale Prices, Consumer Prices and Inflation   From the man on the street to the highest policy makers, the behavior of prices is of intimate concern. Prices determine the pu

What are the production elasticities of demand, The following Cobb-Douglas ...

The following Cobb-Douglas production function is used to describe the output generated by a local government maintenance agency. Q = αL β1 K β2 E β3 Where L represents numb

What is the emerging market economy, What is the emerging market economy ...

What is the emerging market economy According to Investopedia, Antoine W. Van Agtmael of International Finance Corporation of the World Bank first mentioned the term emerging m

What is national income, Q. What is national income? What are the different...

Q. What is national income? What are the different methods of measuring national income? National income is the aggregate money value of the annual flow of final goods and serv

Write Your Message!

Captcha
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!

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