Homework Answers
Question 1
(a)
Calculate the monetary base in August 1929 -
Monetary base = Reserves in August 1929 + Currency in August 1929
Monetary base = 3.2 + 3.9 = 7.1
The Monetary base in August 1929 was 7.1
(b)
Calculate the money multiplier in August 1929 -
Money multiplier = Money supply in August 1929/Monetary base in August 1929
Money multiplier = 26.5/7.1
Money multiplier = 3.73
The money multiplier in August 1929 was 3.73
(c)
Calculate the Reserve-deposit ratio in August 1929 -
Reserve-deposit ratio = Reserves in August 1929/Deposits in August 1929
Reserve-deposit ratio = 3.2/22.6
Reserve-deposit ratio = 0.14
The reserve-deposit ratio in August 1929 was 0.14.
(d)
Calculate the currency-deposit ratio in August 1929 -
Currency-deposit ratio = Currency in August 1929/Deposits in August 1929
Currency-deposit ratio = 3.9/22.6
Currency-deposit ratio = 0.17
The currency-deposit ratio in August 1929 was 0.17
(e)
Calculate the deposits in March 1933 -
Deposits = Money supply in March 1933 - Currency in March 1933
Deposits = 19 - 5.5
Deposits = 13.5
The deposits in March 1933 was 13.5
(f)
Calculate the money multiplier in March 1933 -
Money multiplier = Money supply in March 1933/Monetary base in March 1933
Money multiplier = 19/8.4
Money multiplier = 2.26
The money multiplier in March 1933 was 2.26
(g)
Calculate the Reserve-deposit ratio in March 1933 -
Reserve-deposit ratio = Reserves in March 1933/Deposits in March 1933
Reserve-deposit ratio = 2.9/13.5
Reserve-deposit ratio = 0.21
The Reserve-deposit ratio in March 1933 was 0.21
Add Answer to:
1. The table below shows data on the behavior of the money supply during the onset...
6. As a Case Study in the chapter discusses, the money supply fell from 1929 to...
6. As a Case Study in the chapter discusses, the money supply fell from 1929 to 1933 because both the currency-deposit ratio and the reserve-deposit ratio increased. Use the model of the money supply and the data in Table 4-2 to answer the following hypothetical questions about this episode. a. What would have happened to the money supply if the currency-deposit ratio had risen but the reserve-deposit ratio had remained the same? onetary System: What It Is and How It...
5. The money multiplier In the following data table, calculate the amount of excess reserves and...
5. The money multiplier In the following data table, calculate the amount of excess reserves and the monetary base and then use the table to answer the questions that follow. Category Value (Billions of Dollars) Currency, C 450.00 Deposits, D 400.00 Reserves, R 49.00 Required Reserves, RR 46.00 Excess Reserves Monetary Base Use the previous data table to fill in the missing cells in the following table. (Hint: Round to the nearest hundredth.) Ratio Value Currency Ratio, kk Required Reserves...
need an answer to question 5 textbook is macroeconomics 9th edition to keep the money supply...
need an answer to question 5
textbook is macroeconomics 9th edition
to keep the money supply at its original level, does it culate, in dollars, how much the central bank . Explain how banks create money 5. What are the various ways in which the Federal 6. As a Case Study in the chapter discusses, the Reserve can influence the money supply? money supply fell from 1929 to 1933 because Why might a banking crisis lead to a fall in...
8.The reserve requirement, open market operations, and the money supply
Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $500. Determine the money multiplier and the money supply for each reserve requirement listed in the following table.Reserve RequirementSimple Money MultiplierMoney Supply(Percent)(Dollars)25 10 A higher reserve requirement is associated with a money supply.Suppose the Federal Reserve wants to increase the money supply...
8. The reserve requirement, open market operations, and the money supply Assume that banks do not...
8. The reserve requirement, open market operations, and the money supply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $500. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) Money Supply (Dollars) Simple Money Multiplier A lower reserve requirement is associated...
Scenario: Holding Cash Suppose that the public holds 50% of the money supply in currency and...
Scenario: Holding Cash Suppose that the public holds 50% of the money supply in currency and the reserve ratio is 20 percent. Banks hold no excess reserves. A customer deposits $6000 in her chequeable deposit. 5. (Scenario: Holding Cash) The money multiplier is: a equal to 2 b.greater than 5. c 0 equal to 5. d loss than 5
In the following data table, calculate the amount of excess reserves and the monetary base and...
In the following data table, calculate the amount of excess reserves and the monetary base and then use the table to answer the questions that follow Category Currency, C Deposits, D Reserves, R Required Reserves, RR Excess Reserves Monetary Base Value (Billions of Dollars) 650.00 500.00 31.00 28.00 Use the previous data table to fill in the missing cells in the following table. (Hint: Round to the nearest hundredth.) Ratio Currency Ratio, k Required Reserves Ratio, r Value $840.00 billion...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
4. If nominal money demand doubles and the real money supply also does what happens to...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
1 Mock exam 2.pdf X + - v A 5 X 5 of bo Fit to...
1 Mock exam 2.pdf X + - v A 5 X 5 of bo Fit to page Page view A9 Read aloud Addnates P 3. Assume the natural rate of unemployment in the U.S. economy is 4 percent, the actual rate of unemployment is & perceat and actual GDP is $20 trillion. Calculate potential GDP in trillions. 4. Consider the following situations. a. Bank reserves are $100, the public holds $200 in currency, and the required reserve ratio is 0.25....
6. As a Case Study in the chapter discusses, the money supply fell from 1929 to 1933 because both the currency-deposit ratio and the reserve-deposit ratio increased. Use the model of the money supply and the data in Table 4-2 to answer the following hypothetical questions about this episode. a. What would have happened to the money supply if the currency-deposit ratio had risen but the reserve-deposit ratio had remained the same? onetary System: What It Is and How It...
need an answer to question 5
textbook is macroeconomics 9th edition
to keep the money supply at its original level, does it culate, in dollars, how much the central bank . Explain how banks create money 5. What are the various ways in which the Federal 6. As a Case Study in the chapter discusses, the Reserve can influence the money supply? money supply fell from 1929 to 1933 because Why might a banking crisis lead to a fall in...
8. The reserve requirement, open market operations, and the money supply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $500. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) Money Supply (Dollars) Simple Money Multiplier A lower reserve requirement is associated...
Scenario: Holding Cash Suppose that the public holds 50% of the money supply in currency and the reserve ratio is 20 percent. Banks hold no excess reserves. A customer deposits $6000 in her chequeable deposit. 5. (Scenario: Holding Cash) The money multiplier is: a equal to 2 b.greater than 5. c 0 equal to 5. d loss than 5
In the following data table, calculate the amount of excess reserves and the monetary base and then use the table to answer the questions that follow Category Currency, C Deposits, D Reserves, R Required Reserves, RR Excess Reserves Monetary Base Value (Billions of Dollars) 650.00 500.00 31.00 28.00 Use the previous data table to fill in the missing cells in the following table. (Hint: Round to the nearest hundredth.) Ratio Currency Ratio, k Required Reserves Ratio, r Value $840.00 billion...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
1 Mock exam 2.pdf X + - v A 5 X 5 of bo Fit to page Page view A9 Read aloud Addnates P 3. Assume the natural rate of unemployment in the U.S. economy is 4 percent, the actual rate of unemployment is & perceat and actual GDP is $20 trillion. Calculate potential GDP in trillions. 4. Consider the following situations. a. Bank reserves are $100, the public holds $200 in currency, and the required reserve ratio is 0.25....
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