1. All of the following described are attributes of Fiat money except: 1. Money without intrinsic value 2. Used as money because of government decree 3. This note is legal tender for all debts, public and private 4. Paper money backed by gold standard
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- 1. Some government bonds can be redeemed for currency or a check at banks. Why, then, isn't it universally agreed that government bonds are money? 2. Why can't food be used as a form of money? 3. What is a key advantage of money over other financial assets such as stocks, bonds, precious metals, or real estate?Which of the following factors pose a limit on the ability of commercial banks to increase the quantity of money in circulation by extending new loans? Select one or more: a. the quantity of Central Bank reserves that they own b. the quantity of money that savers lent to them by opening deposits c. the behavior of households and firms, which reduce the quantity of money in circulation by repaying previous loans. d. the availability of profitable lending opportunities in the economy e. the willingness of household and firms to take up new debts at the given interest rateAssuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the two banks as at 2019.Classic BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 1,000 Deposits 3,000Securities 2,000 Equity 7,000Loans & Advances 1,000Property, Plant and Equipment 6,000 .10,000 10,000 Prudent BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 600 Deposits 2,500Securities 1,500 Equity 4,400Loans & Advances 800Property, Plant and Equipment 4,000 .6,900 6,900Assume a required reserve ratio of 10%.(a) What is the amount of excess reserves in this commercial banking system? (b)What is the maximum amount that the money supply can be expanded? What would be the effect of a fall in reserve ratio to 5%, on the maximum amount that the money supply can be expanded? (c) Determine the stock of broad money supply assuming the non-bank public holds…
- 2. Show that the study of Islamic macroeconomics intersects with the Islamic economic system! 3. Ibn Khaldun stated: "the wealth of a country is not determined by the amount of money it has. But it is determined by how much the country's ability to produce goods and services and the efficiency of the country in producing it" Explain the meaning of this statement and how should the monetary authorities react to it?Which of the following statements about money that is correct? A. Inflation brings a rising value of money. B. A work of art is an example of money because it can act as a store of value. C. Money is a completely stable store of value. D. Without a medium of exchange, goods and services must be exchanged directly for other goods and services.Corna - virus Pandemic has affected many people in Barbad0s, causing not being able to work , which resulted in a reduced activity in the economy.1. Carefully explain with use of graph the effect of reduced activity in the economy on the Money/financial market. Identify 0ne policy along with the aim of said policy enacted by the government(Barbados) to deal with reduced activity in the economy because of the Pandemic. 2. Using the same graph from question-one illustrate and described the impact of the policy-enacted.3. Discuss two monetary policies that could be introduced by the central-bank which would have the same impact as the policy identified in question two that was enacted by the government.4. From the three policies from question 2 and question 3 , identify one that would be most effective and why?
- 4. List two types of Monetary Authorities. b. Explain how they maintain the value of money. а.Table 10-2 Last Bank of Cedar Bend Assets: Reserves Loans Liabilities: $25 000 Deposits $180 000 S155 000 efer to the Table 10-2. If the reserve requirement is 10 percent and then someone deposits $50 000 into the bank, what is the bank's reserve osition? alect one: cross a. It will have $52 000 in excess reserves. cros b. It will need to raise reserves by $5000. cros c. It will have $57 000 in excess reserves. d. It will have excess reserves of $2000.4. According to Monetary neutrality and classical macroeconomics, the increase in money supply ________________________ (a) Increase the GDP deflator (b) decrease the GDP deflator (c) Increase real GDP (d) decrease real GDP (e) both GDP deflator and real GDP do not change