What are the challenges that the country may encounter on the journey to achieve the goals?
May 1, 2020Explain The Wolf of Wall Street Investment
May 1, 2020Question Description
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nnMoney and Bankingnn1. In many casinos, a person buys chips to use for gambling. Within the walls of the casino, these chips can often be used to buy food and drink or even a hotel room. Do chips in a gambling casino serve all three functions of money?nn2. A bank has deposits of $400. It holds reserves of $50. It has purchased government bonds worth $70. It has made loans of $300. Set up a T-account balance sheet for the bank, with assets and liabilities, and calculate the bank’s net worth.nn3. For the following list of items, indicate if they are in M1, M2, or neither: nna. Your $5,000 line of credit on your Bank of America cardnnb. $50 dollars’ worth of traveler’s checks you have not used yetnnc. $1 in quarters in your pocketnnd. $1200 in your checking accountnne. $2000 you have in a money market accountnn4. Explain why you think the Federal Reserve Bank tracks M1 and M2.nn5. Suppose the Fed conducts an open market purchase by buying $10 million in Treasury nnbonds from Acme Bank. Sketch out the balance sheet changes that will occur as Acmennconverts the bond sale proceeds to new loans. The initial Acme bank balance sheet containsnnthe following information: Assets – reserves 30, bonds 50, and loans 50; Liabilities – depositsnn100 and equity 30.nnMonetary Policynn6. The Federal Reserve wants to fight a recession and it conducts a $10 million open market purchase of government bonds. The required reserve ratio (r) is 10 percent. nna. What is the largest possible increase in the money supply that could result? Explain. nnb. What is the smallest possible increase in the money supply that could result? Explain. nn7. All other things being equal, by how much will nominal GDP expand if the central bank nnincreases the money supply by $100 billion, and the velocity of money is 3? M*V = P*Y.nn8. How is a central bank different from a typical commercial bank?nn9. How do the expansionary and contractionary monetary policies affect the quantity of money?nn10. Explain how to use quantitative easing to stimulate aggregate demand.nn
