Question

Intermediate macroeconomics

Due to lock down I need help with my homework please! I want help understanding what I am doing wrong. I bolded and put an X next to what I got when I did the work myself but I am lost on question 13.
With the options I listed the options under question!

Questions 1 to 5 refer to the following.

Question 1
Assume a Baumol-Tobin environment in which an individual receives an annual income of $80,000 in a savings account that pays a nominal interest rate of 10%. Each trip to the bank to withdraw cash incurs a fixed cost of $20.  

If the individual makes 4 trips to the bank, how much is the total fixed cost incurred?

Group of answer choices

x$80

$90

$100

$110

Question 2 If the individual makes 4 trips to the bank, how much is the foregone income?

Group of answer choices

x$1,000

$1,110

$1,120

$1,130

Question 3 If the individual makes 4 trips to the bank, how much is the total cost incurred?

Group of answer choices

$1,020

$1,050

x$1,080

$1,095

Question 4 Determine the optimal number of bank trips that the individual should make.

Group of answer choices

10

x14

16

20

Question 5 Based from the optimal trips made, what is the total cost incurred?

Group of answer choices

$365.61

$483.11

x$565.71

$613.12

Question 6

Questions 6 to 10 refer to the following.

Let us suppose for the United States that, currently, the monetary base is $100 (in billions), the currency-deposit ratio is c = 50%, the excess reserves-deposit ratio is e = 1%, and the reserve-deposit ratio is r = 8%.

Calculate the supply of money.

Group of answer choices

$141

$168

$185

x$254

Question 7 Other things being equal, if the Federal Reserve pursues a contractionary monetary policy, raising the reserve-deposit ratio to 10%, what happens to the supply of money?

Group of answer choices

Money supply decreases to $225

xMoney supply decreases to $246

Money supply increases to $287

Money supply increases to $291

8: Other things being equal, if people have greater preference to hold cash, leading to a currency-deposit ratio of 70%, what happens to the supply of money?

Group of answer choices

xMoney supply decreases to $215 I picked this one

Money supply decreases to $137

Money supply increases to $359

Money supply increases to $411

9: Other things being equal, if banks are extremely cautious about lending, leading to an excess reserves-deposit ratio of 90%, what happens to the supply of money?

Group of answer choices

xMoney supply decreases to $101.3 I picked this one

Money supply decreases to $127.5

Money supply increases to $219.2

Money supply increases to $370.4

10: What do questions 8 and 9 tell you about the ability of the Federal Reserve to control the supply of money?

Group of answer choices

A: If people choose to hold more cash, less new money will be created than what the central bank may intend to generate.

False xTrue      

B: If banks choose to hold more reserves, less new money will be created than what the central bank may intend to generate.

False xTrue

11: Questions 11 to 13 refer to the following.

You may have heard from the news some commentators saying that the Federal Reserve, when pursuing an expansionary monetary policy, engages in “helicopter money.” That is, it is as if the Federal Reserve drops 1,000 of newly printed $1 bills. Let us suppose this is the case. Calculate by how much the supply of money will increase for each of the following scenarios.

Question 11: Suppose all the new bills are held by the public.

Note: Recall that: M S = C + D

Group of answer choices

11: The supply of money in the economy increases by C + D = $1,000 + 0 = $1,000. All in currency, none in deposits.

xTrue or False


12:Suppose all the new bills are deposited in banks (that is, held as demand deposits). Banks hold 20 percent of deposits as reserves, and there are no excess reserves.

Note: Recall the following formula:

$LaTeX: \text{ }M^S=\left(\frac{1+c}{c+r+e}\right)B$   M S = ( 1 + c c + r + e ) B

Group of answer choices

$3000

$4,000

x$5,000

$6,000

13:Suppose people hold equal amounts of currency and demand deposits. Banks hold 20 percent of deposits as reserves, and there are no excess reserves.

Note:

1. Recall the following formula: $LaTeX: \text{ }M^S=\left(\frac{1+c}{c+r+e}\right)B$   M S = ( 1 + c c + r + e ) B

2. If C = D, then the currency-deposit ratio is c = 1.

Group of answer choices

$1,111.15

$1,278.13

$1,666.67

$2,149.11

Questions 14 to 15 refer to the following.

14: Consider Kath and Kim. Suppose Kath lends money to Kim at a nominal interest rate of 12%, with both expecting that the inflation rate is 8%. After the loan has been repaid, Kath discovered that the actual inflation rate turned out to be 4%.

• What real interest rate did Kath expect to receive?
• What real interest rate did Kath actually receive?

Group of answer choices

A: expected real interest rate

      [ Choose ]            8%         x4%      

B: actual real interest rate

      [ Choose ]         x8%          4%      

15:We can conclude that:

As a consequence of unanticipated inflation, Kath arbitrarily benefited from the transaction. She expected to get a real return of 4%, but actually obtained 8%.

Group of answer choices

xTrue

False

Answer 1

There are many questions have answered the 1st four as per company policy.

(1) Annual Income - $80,000 (Y) Interest Rate 10%. (E) fixed cost with drawl to 7. $20.14 toups to the Bank. . Cost Incorred in the 4 trips you $20x4 - 1$80 a (Ans) (2) foregone liveone = Money withdrawal when the opportunity conces -4% 250$ - $ 1000 (a) (3) no Total cost encoried foregone Income & Lost Incerred $1000+ $80 1$ 1080 0.5 (4) Optional number of Trips V xi)/2c) 5(80,000 x 10%)/(2* $ 20)} - $$9,000 4404 (20030.5 14.142 2 14 trips b (Ane) sos 20120.5