If the required reserves ratio is 50 % and the Federal Reserve sells $100 million of bonds, what will happen to money supply?             If the reserve requirements ratio is 10% and the Federal Reserve buys $100 million bonds, what will happen to the money supply?             If the Fed decreases the reserve requirements ratio from 50% to 20% what will happen to the money multiplier?

Pandemic has caused higher unemployment rate and lower growth in GDP. Federal Reserve wants to buy more 1-year and 10-year Treasury securities and sell 5-year Treasury securities to stimulate the economy. What would be shape of Treasury yield curve as a result of this move by Fed? Explain this yield curve using appropriate theory of term structure.

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Suppose a government has no debt and a balanced budget. Suddenly it decides to spend $4 trillion while raising only $3 trillion worth of taxes. (a) What will be the government's deficit? (b) If the government finances the deficit by issuing bonds, what amount of bonds will it issue? (c) At a 4 percent rate of interest, how much interest will the government pay each year? (d) Add the interest payment to the government's $4 trillion expenditures for the next year, and assume that tax revenues remain at $3 trillion. In the second year, compute: (i) the deficit; (ii) the amount of new debt (bonds) issued to finance the deficit in the second year; (iii) the total debt at the end of the second year; and (iv) the debt service requirement. Express all money figures in billions of dollars.

[Related to Solved Problem 11.13 Suppose that you intend to buy a house for $210,000. Calculate your bank leverage ratio for this investment in each of the following situations: You pay the entire $210,000 price in cash Bank leverage ratio is equal to

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