(Q#4) Banks have become much less strict about issuing new credit cards. They are issuing far more cards, with lower rates and more generous credit limits. First predict how this will impact the demand for money balances. The expansion of credit cards will end up: [a] increasing the demand for money balances since more items will be purchased and more money will be needed to pay for them [b] reducing the demand for money balances as the delay of payment with them reduces the immediate need for money in a bank checking account

(Q#4) Banks have become much less strict about issuing new credit cards. They are issuing far more cards, with lower rates and more generous credit limits. First predict how this will impact the demand for money balances. The expansion of credit cards will end up: [a] increasing the demand for money balances since more items will be purchased and more money will be needed to pay for them [b] reducing the demand for money balances as the delay of payment with them reduces the immediate need for money in a bank checking account

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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As a result of the Fed's sale of $3,000 worth of government securities to First Main Street Bank, the bank becomes reserve deficient. Suppose that Nick, a First Main Street Bank's customer, re-pays back the $3,000 loan he took out a few months ago. STEP: 2 of 3 Which of the following most accurately describes First Main Street Bank's actions? The bank keeps the $3,000 as reserves. The bank creates a $42,000 loan. The bank keeps the $450 as reserves. The bank creates a $3,000 loan. The money supply in the economy is $
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Assignment 3 “The latest Economic and Financial Data from Bank of Ghana (BoG) revealed that the total value of Mobile Money (MoMo) transactions in the country has grown to GH¢569 billion in 2020 from GH¢32.8 billion in 2019”. However, in the 2022 budget the Ministry of Finance has introduced (pending Parliamentary approval) 1.7% mobile money tax. This is expected to affect the degree of patronage of mobile money in the era of COVID 19. Notwithstanding, this development more financial institutions are expected to penetrate the mobile money markets next year. Required: Examine the channels through which the financial institutions can circumvent the harmful effects of the Mobile Money Tax (if it is accepted by parliament) and boost their performance by penetrating the mobile money market.
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Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $200. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) (Dollars) 25 10
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The FED has recently decided to reverse the massive buildup of its holding of Treasury and mortgage bonds. Thus, they began to sell these Treasury securities in the financial markets to remove liquidity from them and reduce the supply of money and credit in the economy. This will create a shortage in the money market.
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