Suppose that Maria makes a new cash deposit of $75,000. If the assumptions of the multiplier-deposit expansion process hold, (with the required reserve ratio set at 20%), this deposit will ________(INCREASE /DECREASE)   the money supply by $____________   . (Note: Currency held by the public is counted in the money supply as part of M1.)

Assume that Jimmy Cash has $2,500 in his checking account at Folsom Bank and uses his checking account debit card to withdraw $250 of cash from the bank's ATM machine. By what dollar amount did the M1 money supply change as a result of this single, isolated transaction? Instructions: Enter your answer as a whole number. %24

Suppose the desired reserve ratio in Canada is 15%. Assume that the Bank of Canada has decided to increase the total quantity of money in the economy-as measured by M1-by $150 million. The Bank plans to do this by printing Canadian dollars. How much money must the Bank print to increase the money supply by the desired amount? (Calculate your answer in millions of CAD, round it to two decimal places, and write it without units. E.g., write 1.00 for $1 million.)

8. Consider a hypothetical economy with a nominal GDP of $1.2 trillion, real GDP of $600 billion, and money supply of $60 billion. Suppose commercial banks are required to maintain a reserve requirement of 10% of deposits. Assume that banks do not hold excess reserves. a) Calculate the money multiplier for this economy. If the central bank buys $1 billion of government bonds, what is the effect on money supply? Show your work. b) Using the quantity theory of money, calculate the price level and the velocity of money for this economy prior to central bank action. Show your work. c) Assume that velocity is constant and real GDP increases by 2% each year. What will happen to nominal GDP and the price level next year if money supply does not change? Show your work. d) In (c), what money supply should the central bank set next year to keep the price level unchanged? Show your work. e) In (c), what money supply should the central bank set next year if it wants inflation of 5%? Show your…