Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134004976
Author: Michael Parkin
Publisher: PEARSON
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Question
Chapter 8, Problem 27APA
(a)
To determine
Determine the money multiplier of the country U.K
(b)
To determine
Determine the value of monetary base in the country Aussie.
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The desired reserve ratio is 10 percent of deposits, and the currency drain ratio is 1 percent of deposits
The central bank makes an open market purchase of $3 million of securities.
Calculate the change in the quantity of money. How much of the new money is currency and how much is
bank deposits?
>>> Answer to 2 decimal places
The quantity of money changes by $27.55 million.
of the new money created,
million is bank deposits
The desired reserve ratio is 1 percent of deposits, and the currency drain ratio is 2 percent of deposits.
The central bank makes an open market purchase of $4 million of securities.
Calculate the change in the quantity of money. How much of the new money is currency and how much is bank deposits?
>>> Answer to 2 decimal places.
.....
The quantity of money changes by 5
million.
Chapter 8 Solutions
Macroeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
Ch. 8.1 - Prob. 1RQCh. 8.1 - Prob. 2RQCh. 8.1 - Prob. 3RQCh. 8.1 - Prob. 4RQCh. 8.1 - Prob. 5RQCh. 8.2 - Prob. 1RQCh. 8.2 - Prob. 2RQCh. 8.2 - Prob. 3RQCh. 8.2 - Prob. 4RQCh. 8.2 - Prob. 5RQ
Ch. 8.3 - Prob. 1RQCh. 8.3 - Prob. 2RQCh. 8.3 - Prob. 3RQCh. 8.3 - Prob. 4RQCh. 8.3 - Prob. 5RQCh. 8.4 - Prob. 1RQCh. 8.4 - Prob. 2RQCh. 8.4 - Prob. 3RQCh. 8.5 - Prob. 1RQCh. 8.5 - Prob. 2RQCh. 8.5 - Prob. 3RQCh. 8.5 - Prob. 4RQCh. 8.5 - Prob. 5RQCh. 8.6 - Prob. 1RQCh. 8.6 - Prob. 2RQCh. 8.6 - Prob. 3RQCh. 8.6 - Prob. 4RQCh. 8 - Prob. 1SPACh. 8 - Prob. 2SPACh. 8 - Prob. 3SPACh. 8 - Prob. 4SPACh. 8 - Prob. 5SPACh. 8 - Prob. 6SPACh. 8 - Prob. 7SPACh. 8 - Prob. 8SPACh. 8 - Prob. 9SPACh. 8 - Prob. 10APACh. 8 - Prob. 11APACh. 8 - Prob. 12APACh. 8 - Prob. 13APACh. 8 - Prob. 14APACh. 8 - Prob. 15APACh. 8 - Prob. 16APACh. 8 - Prob. 17APACh. 8 - Prob. 18APACh. 8 - Prob. 19APACh. 8 - Prob. 20APACh. 8 - Prob. 21APACh. 8 - Prob. 22APACh. 8 - Prob. 23APACh. 8 - Prob. 24APACh. 8 - Prob. 25APACh. 8 - Prob. 26APACh. 8 - Prob. 27APA
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- Give typing answer with explanation and conclusionarrow_forwardWhat is the effect of the following on the money supply: a. Increase in currency- deposit ratio, keeping all other things constant. b. Decrease in reserve -deposit ratio, keeping all other things constant.arrow_forwardWhat is the effect of the following on the money supply? i. Increase in currency–deposit ratio, keeping all other things constant. ii. Decrease in reserve–deposit ratio, keeping all other things constant.arrow_forward
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- The pandemic has impacted the use of currency in our economy. Explain in your own words, how the changes in the use of currency would affect the monetary base in the banking system, while holding all other factors constant.arrow_forwardIn the following data table, calculate the amount of excess reserves and the monetary base and then use the table to answer the questions that follow. Category Currency, C Deposits, D Reserves, R Required Reserves, RR Excess Reserves Monetary Base Value (Billions of Dollars) 700.00 500.00 31.00 23.00 $8 $731 0.06 0.02 Use the previous data table to fill in 16.13 sing cells in the following table. (Hint: Round to the nearest hundredth.) Ratio Currency Ratio, k Required Reserves Ratio, r Excess Reserves Ratio, l'ex Money Supply Multiplier, MsM 1.4 0.05 16.13 Based on your answers to the previous questions, the money supply isarrow_forwardYou take Rs. 400 you had kept under your mattress and deposit it in your bank account. If this Rs. 400 stays in the banking system as reserves and if banks hold reserves equal to 10 percent of deposits, By how much does the total amount of deposits in the banking system increase?Blank 1(Please write only numbers in the blank. Do not write commas or currency signs in the blank)By how much does the money supply increase?Blank 2(Please write only numbers in the blank. Do not write commas or currency signs in the blank)arrow_forward
- Suppose that a country computes its monetary aggregates in the same way as the Federal Reserve. The relevant table on the central bank website reports the following values. a. b. C. Currency Treasury securities Savings deposits Other checkable deposits Large time deposits Bank reserves Retail money market mutual funds Demand deposits Small time deposits $751 $1,041 $642 $241 $802 $167 $105 $524 $361 What is the value of M1? (Give $ value.) What is the value of the monetary base? (Give $ value.) Suppose the interest rate on government bonds is 2.7%. What is the government's seigniorage revenue? (Give a $ value; ignore the costs of printing the currency, etc., and assume the central bank does not pay interest on reserves.)arrow_forwardAn initial deposit of $10,000 at a ratio of 10% from currency in circulation, will lead to a maximum change in the composition of the money supply by?arrow_forwardSuppose that the required reserve ratio is equal to 10%. If the currency-to-deposit ratio is fixed at 20%, what is the money multiplier? If the monetary base is $100 million, what is the money supply?arrow_forward
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