If the Fed purchases $100 of bonds in an open market operation. People & companies divide their monetary assets as C (currency/cash) =20% and D (deposit) =80% Trans 2. If the recipient of $100 newly-injected money from the Fed, and he keeps $_ $_ The transaction change money supply by how much or not? and why? Lin cash (C) and deposits in to a checking account (D).

Chr Out Suppose the reserve requirement is 5 percent. For every $100 on deposit, the bank needs to hold $ as reserves. (Add only a number; the dollar sign has been provided for you.)

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Why are credit cards not included in the money supply even though they can be used easily for transactions? A. Because credit cards are not always 100% reliable. B. Because credit cards are not physical money. C. Because there are other more efficient methods of money supply. D. Because the credit card company is effectively making you a loan..

The central bank buys $10,000 worth of bonds in the open market from Elaine, who deposits the proceeds in her checking account at MSM Bank. The required reserve ratio is 5%. (a) What is the amount by which MSM Bank’s liabilities have changed? Explain. (b) Calculate the change in required reserves for MSM Bank. Show your work. (c) What is the dollar value of the maximum amount of new loans MSM Bank can initially make as a result of Elaine’s deposit? Explain. (d) Based on the central bank’s open-market purchase of bonds, calculate the maximum amount by which the money supply can change throughout the banking system. Show your work. (e) How will the change in the money supply in part (d) affect aggregate demand and the price level in the short run? Explain.

explain this statement in details " money is a difficult concept to define, partly because it fufill several function and partly because of other liquid asset that can serve as substitute for money" explain

Use the following values in this T-account to answer the questios below: (use 2 decimal places for any answer that have decimals) ASSETS Reserves Loans Gov. Bonds $1,000 Stocks $1,250 $750 LIABILITIES $10,000 www 1. Assume that the bank only keeps Required Reserves. What is the reserve requirement in this economy? Blank 1% 2. Based on the information provided, how much money would be available for investments by this bank? Blank 2 3. Based on the information provided, how much money does this bank hold in form of loans? Blank 3