Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 8, Problem 7SPA
To determine
Identify the interest rate when the real
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Suppose the current money supply (M) is 4.8 billion U.S. dollars, the nominal gross domestic product (GDP) is 72 billion U.S. dollars, and the actual gross domestic product (Y) is 12 billion U.S. dollars. Calculate the price level (P) and the velocity of money (V) separately. Show your steps.
Suppose you win on a scratch-off lottery ticket and you decide to put all of your $3,500 winnings in the bank. The reserve
requirement is 5%.
What is the maximum possible increase in the money supply as a result of your bank deposit?
maximum increase: $
Which events could cause the increase in the money supply to be less than its potential?
Banks choose to loan out all excess reserves.
Some loan recipients choose to hold some cash instead of depositing all of it in banks.
Banks decide to keep some excess reserves on hand.
All money loaned out is deposited back into the banking system.
The Federal Reserve manages the amount of money in circulation by buying or selling U.S. Treasury securities, usually Treasury bills. The increase or decrease of money in circulation helps the Fed to control inflation or deflation. This has an effect on your disposable income. Research the Federal Reserve system and money supply, then answer the following questions.
Under what conditions would the Fed choose to decrease the money supply, how would it do so, and what is the goal of doing so? How does the Fed factor inflation into its actions?
Chapter 8 Solutions
Macroeconomics
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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