Bank XYZ has the following bank balance sheet: Assets Li…
Bank XYZ has the following bank balance sheet: Assets Liabilities Total Reserves $150,000 Demand deposits $100,000 Required reserves $10,000 Savings deposits $50,000 Excess reserves $140,000 What is the reserve requirement ratio set at? John deposits $1,000 in a demand deposit account and $500 in a savings deposit account. What is the new required reserves balance? What is the new excess reserves balance? Complete the following: Calculate the change in the money supply as a result of John’s deposits. Is this an increase or decrease in the money supply? As a result of your answer in part “c”, explain how will this affect aggregate demand in the short run? Submissions:-Text Entry and/or Insert your File using Image Upload in your response with graphs: Draw and insert your graph (using the Image Upload) and then type your answer the questions below your graph
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Complete the following: Draw the diagram for Country A when it is experiencing macroeconomic equilibrium. Be sure to label this correctly. Household indebtedness increases in Country A. What will shift, and in which direction? Draw this on your original diagram. What kind of gap is created? According to classical economists, what will happen in this economy? Explain. The government decides to use fiscal policy. What tools could be used? If the gap is $400 million, and the MPC is 0.5: By how much and in what direction would the government change spending? By how much and in what direction would the government change taxes? Explain what is meant by the MPC of 0.5. Submissions:-Text Entry and/or Insert your File using Image Upload in your response with graphs: Draw and insert your graph (using the Image Upload) and then type your answer the questions below your graph
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