Question Details

[answered] 1. IF R = 680 ; C= 320 ; D = 1280 ; L= 600 on Wednesday ; t


I ?have an Economics 450 test tomorrow and need help finding old tests, practice questions, study materials, etc

School: Binghamton University

Professor: Dr.? Moustafa M. Fadl, Ph.D., CFA

Course Title: Monetary Economics

Textbook: https://www.amazon.com/Money-Banking-Financial-Markets-Laurence/dp/1429244097

Textbook chapters on the test: 11, 12, 13, and 14.

Test format: ?He mentioned it would be roughly 36 multiple choice and 6-7 short answer. ?

So finding old tests like this can really help me study. ?The materials I currently have are the textbook, the slides that accompany the textbook, and the homeworks he assigned us for chapters 11, 12, 13, and 14. (attached)





1. IF R = 680 ; C= 320 ; D = 1280 ; L= 600 on Wednesday ; then the bank decides to lend 360 on

 

Thursday , such that L = 960 ; R = 320 ; C = 680 ; D=1280. Continue with the same logic what are

 

the Monetary Base and the Money Supply, R, C , D , and L ; for the following Friday , Monday ,

 

Tuesday and Wednesday? Continue to assume the currency?deposit ratio and reserve?deposit

 

ratio are 0.25. ( don?t forget to write down the balance sheet for each of these days for the bank)

 

Question one is worth 6 points and the rest is one point each 2.

 

When someone keeps $100 in cash under her pillow and one day takes it out and deposits it in a

 

checking account, this action will: A. immediately increase the monetary base and the money supply. B. have no impact on the monetary base and immediately increase the money supply. C. have no impact on the monetary base and eventually increase the money supply. D. eventually decrease the monetary base and leave the money supply unchanged. 3.

 

Suppose that foreigners start holding more U.S. currency. For a given interest rate, Americans

 

don?t change their holdings of either currency or checking deposits. Assume the Fed keeps the monetary

 

base constant. Describe what happens to:

 

I. the money supply

 

II.money demand

 

III.the equilibrium interest rate A.

 

the money supply is unchanged, money demand increases and the equilibrium interest rate

 

increases.

 

B.

 

the money supply increases, money demand increases and the equilibrium interest rate is

 

unchanged.

 

C.

 

the money supply decreases, money demand increases and the equilibrium interest rate

 

increases.

 

D. the money supply, money demand, and the equilibrium interest rate are all unchanged. 4.

 

Suppose that foreigners start holding more U.S. currency. For a given interest rate, Americans

 

don?t change their holdings of either currency or checking deposits and the Fed makes no attempt to

 

keep the monetary base constant. Consider the following actions by the Fed:

 

I. The Fed targets the money supply

 

II. The Fed targets the interest rate A. the monetary base will have to increase by less than under money supply targeting by the Fed. B. the monetary base will have to increase by more than under money supply targeting by the Fed. C.

 

the monetary base will have to change by the same amount than under money supply targeting

 

by the Fed.

 

D. the monetary base will have to decrease by less than under money supply targeting by the Fed. 5.

 

Prior to the financial crisis of 2008 the majority of the Fed?s asset holdings on its balance sheet

 

were ___. In response to the crisis, the Fed?s assets grew to include which of the following?

 

i. mortgage backed securities

 

ii. foreign currency

 

iii. bonds issued by Freddie Mac and Fannie Mae A. government bonds, i only B. domestic currency, ii only C. municipal bonds iii only D. reserves, ii and iii only 6.

 

Suppose the discount rate is below the federal funds rate, and banks can borrow as much as

 

they want from the Fed. What would happen to the federal funds rate? A. The federal funds rate would fall, but stay above the discount rate. B. The federal funds rate would fall to the level of the discount rate. C. The federal funds rate would rise. D. The question cannot be answered without additional information. 7.

 

Milton Friedman believed the Fed should control the money supply precisely. In the 1960s, he

 

proposed that the required reserve ratio be raised to 100 percent. How would this policy improve

 

control of the money supply? What are the drawbacks to the policy? A. This policy would somewhat improve control of the money supply with no other drawbacks. B.

 

This policy would somewhat improve control of the money supply with the drawback that banks

 

would not be able to give loans.

 

C. This policy would give the Fed perfect control over the money supply with no other drawbacks. D.

 

This policy would give the Fed perfect control over the money supply with the drawback that

 

banks would not be able to give loans. 8.

 

In the text, we ignored traveler?s checks in deriving the money multiplier. Suppose we are more

 

careful and include traveler?s checks in the money supply. Let T be the level of traveler?s checks, so T/D is

 

the ratio of traveler?s checks to checking deposits. Derive the money multiplier in terms of C/D, R/D, and

 

T/D. A. m = (C/D+ 1 + T/D)/(C/D + T/D) B. m = (C/D+ 1)/(C/D + R/D) C. m = (C/D+ 1 + T/D)/(T/D + R/D) D. m = (C/D + 1 + T/D)/(C/D + R/D) 9.

 

Suppose the Fed wants to reduce the money supply by $100. Should it buy or sell government

 

bonds? How much should it buy or sell? A.

 

The Fed needs to sell government bonds in the amount of $100/m where m is the money

 

multiplier.

 

B. The Fed needs to sell government bonds in the amount of $100. C. The Fed needs to buy government bonds in the amount of $100. D.

 

The Fed needs to buy government bonds in the amount of $100/m where m is the money

 

multiplier. 10.

 

If the monetary base is $100, the currency?deposit ratio is 0.5 and the reserve deposit ratio is

 

0.1, what is the money multiplier and money supply? A. multiplier: 2.5; money supply: $250 B. multiplier: 0.4; money supply:$40 C. multiplier: 5; money supply: $50 D. multiplier:2.5; money supply:$40 11.

 

The Fed bought an unusually large quantity of Treasury bonds at the end of December 1999.

 

What explains this behavior? (Hint: search online for?Y2K?.) A.

 

In anticipation of Y2K the ratio R/D increased and the Fed needed to buy large quantities of

 

Treasury bonds to keep the money supply constant.

 

B.

 

In anticipation of Y2K the ratio C/D increased, and the Fed needed to buy large quantities of

 

Treasury bonds to keep the money supply constant.

 

C.

 

In anticipation of Y2K the monetary base decreased, and the Fed needed to buy large quantities

 

of Treasury bonds to keep the money supply constant.

 

D.

 

In anticipation of Y2K the banks increased reserves, and the Fed needed to sell large quantities

 

of Treasury bonds to keep the money supply constant. 12. Which is more stable from day to day, the discount rate or the federal funds rate? A.

 

rate. Since the federal funds rate is set directly by the Fed, this rate is more stable than the discount B.

 

rate. Since the federal funds rate is a market interest rate, this rate is more stable than the discount C.

 

rate. Since the discount rate is a market interest rate, this rate is more stable than the federal funds D.

 

rate. Since the discount rate is set directly by the Fed, this rate is more stable than the federal funds Continue to question 13 . Reference: Ref 11-1 13.) (Figure 11.1: The Money Market) Between 1979 and 1982 the Fed targeted money. In

 

1982, the U.S. economy entered a severe recession. Using the liquidity-preference model in

 

Figure 11.1, what do you anticipate happened to the nominal interest rate, i?

 

A. In a recession, incomes fall; with a fall in income comes a decline in money demand,

 

. If the Fed targeted money, money supply would stay constant at S2 and the

 

interest rate would fall from i0 to i1.

 

B. In a recession, incomes fall; with a fall in income comes an increase in money supply,

 

. If the Fed targeted money, they would intervene in money markets to reduce

 

the money supply back to S1 and the interest rate would stay constant.

 

C. In a recession, incomes fall; with a fall in income comes a decrease in money supply,

 

. If the Fed targeted money, they would intervene in money markets to reduce

 

the money supply back to S2 and the interest rate would stay constant.

 

D. In a recession, wealth rises, increasing the demand for money from

 

. If the

 

Fed targeted money, that would reduce money supply back to S2 and the interest rate

 

would fall. 14.

 

According to the Board of Governors in August 2008, reserves equaled $44 billion, currency in

 

circulation equaled $777 billion, and checking deposits were $300 billion. What was the money

 

multiplier? A. about 2.59 B. about 1.31 C. about 0.76 D. about 17.7 15. The Fed increases the monetary base by: I. lending through the Term Auction Facility.

 

II. lending to banks through the discount window.

 

III. increasing interest rates. A. I only B. I and II only

 


 

C. I and III only D. I, II, and III

 


Solution details:
STATUS
Answered
QUALITY
Approved
ANSWER RATING

This question was answered on: Sep 18, 2020

PRICE: $15

Solution~0001001343.zip (25.37 KB)

Buy this answer for only: $15

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy from our tutoring website www.aceyourhomework.com (Deadline assured. Flexible pricing. TurnItIn Report provided)

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Sep 18, 2020

EXPERT

Tutor

ANSWER RATING

GET INSTANT HELP/h4>

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN YOUR SET DEADLINE.

Order Now