Your childhood friend believes Commercial banks no longer have any relevance in the current economic climate and instead he believes we should do FX trading instead. He doesnt understand the financial system but ask your guidance in explaining  how commercial banks really make money? Kindly provide a brief response  with examples in your response to him.

Q: Discuss how the Bank of England can control the money supply and interest rates and then reflect on…

A: The Bank of England has the capacity to control the money supply of money in the economy by either…

Q: f credit cards were made illegal by the central bank, what would happen to velocity of circulation…

A: if credit card is well made illegal by the central bank, then this will lead to decrease in money…

Q: Explain briefly why yield curve is viewed as a useful  indicator of the stance of a country's…

A: The yield curve, commonly known as the interest rate term structure, depicts the yield on bonds…

Q: What does it say are the FED's monetary policy goals (also found in the opening statement in the…

A:

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Q: Briefly describe how liquidity black holes can occur. How can regulation lead to liquidity black…

A: An counterpart of the run outcome in a bank run model is a "liquidity black hole." Traders with a…

Q: Another example of an unconventional monetary policy is "Helicopter money". Based on the references…

A: Helicopter money refers to a significant amount of new money that is printed and delivered to the…

Q: In the mid 1800's, grain sellers in Chicago would deliver their grain to warehouses and receive a…

A: The currency that has been established as money, has no use or intrinsic value and is made legal…

Q: Can you please help with the explanation of the below? In contemporary monetary theory, we do not…

A: The main driver of economic activity, in line with financial theory, could be a amendment within the…

Q: Consider a scenario in which the central bank must follow a rule that requires it to increase the…

A: Beginning from since quite a while ago run balance position, when AD bend movements to one side,…

Q: The following graph represents the money market in a hypothetical economy. As in the United States,…

A: Fed is the central bank of United States which controls the supply of money in the economy.

Q: Read the following extract and answer question? A dull Reserve Bank meeting may be a good thing. As…

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Q: discuss how money supply is determine by the central bank and economics activities

A: Money : Money is something which is used to make transactions and which earns no interest. This…

Q: The economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in…

A: Recession is when the economic growth of the country is decreasing due to which the productivity,…

Q: Which of these is usually the most important asset on the bank of England's balance sheet ? A. Net…

A: The assets are the income which generates income whereas the liabilities are the payments or the…

Q: Use the IS-LM-PC model to answer the following  questions.  In  Japan,  suppose  there  is  a…

A: The IS-LM model, that stands for "investment-savings" (IS) and "liquidity preference-money supply"…

Q: A columnist in the Wall Street Journal refers to “the fear that central banks are powerless to act…

A: Conventional wisdom says that the policies of the central bank become ineffective when the…

Q: What are the main functions of a Central Bank? To reduce unemployment, promote financial stability,…

A: Money is important as it is used to make daily transactions and for making payments. It represents…

Q: Three countries are in a currency union. The countries are identical in that each has the same…

A: We know the Relationship between nominal and real interest rate .  Nominal interest rate = real…

Q: If nominal GDP in an economy is $1500 and the money supply is $500, what is the velocity of money?…

A: the velocity of money, V = P*Y / M

Q: What goods and services are currently priced in Bitcoin?  Give specific examples of goods and…

A: First part People are buying pornography, patio furniture, and a home coronavirus test with…

Q: All other things being equal, by how much will nominal GDP expand if the central bank increases the…

A: According to quantity theory of money: MV = PY Where M is money supply V is velocity of money supply…

Q: Who are the members of the Monetary Board?Please describe

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Q: Should you make William Jennings Bryan with his free-silver movement (easy money) or Grover…

A: William Jennings Bryan is promoter of pain free income. All in all, he is supporting an expansionary…

Q: Describe the impact of financial innovations on the demand for money and velocity.

A: Financial innovation refers to the process of innovating the products and services along with the…

Q: Should you make William Jennings Bryan with his free-silver movement (easy money) or Grover…

A: The central banks use monetary policies to achieve certain economic goals. Expansionary monetary…

Q: According to Monetary Neutrality, what affect will an decrease in the stock of money have on the…

A: Money neutrality is a primary concept in classical economics that states that changes in the supply…

Q: Suppose the economy is experiencing a recession. If the Federal Reserve enacts expansionary monetary…

A: In an economy, recession refers to the situation when there is a significant fall in the economic…

Q: Briefly explain whether each of the following statements is true or false 4. The Tobin speculative…

A: The investments in the economy are considered to be important for the growth of the economy in long…

Q: we know that one of the advantages of monetary policy is its speed and flexibility, discuss some of…

A: Monetary Policy studies the quantity of money available in the economy and controls the flow of…

Q: he annual average percentage change in Real GDP is 2.7%, and the annual average percentage change in…

A: The predetermined rule of money is used to keep the prices stable on an average, If it shows growth…

Q: When conducting an open-market purchase, the Central Bank Select one: a.sells government bonds, and…

A: Open market operations refers to purchasing or selling of government securities or bonds in an open…

Q: 10 Which are the examples of expansionary monetary policy or contractionary monetary policy. Sale of…

A: The government uses fiscal policy to maintain financial and economic stability in the economy.…

Q: If the current interest rate is 5 percent, what will be the equilibrium interest rate if the money…

A: * SOLUTION :-

Q: other things being equal, by how much will nominal GDP expand if the central bank increases the…

A: Central bank through its monetary tools tend to change the level of money supply in an economy.…

Q: The Federal Reserve System was established to provide a stable monetary system for the entire…

A: The monetary policy regulates the money supply aiming to stabilize the economy from both…

Q: The following graph represents the money market in a hypothetical economy. This economy has a…

A: At the point when the Fed raises the federal support target rate, the objective is to build the…

Q: Commercial banks:   implement monetary policy. are nonprofit organizations that lend and borrow…

A: Answer in step 2

Q: Does the lender of last resort function of central banks introduce moral hazard into the financial…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: Assume that the central banks (bog) primary goal is to correct a weak economy. how can it use open…

A: Central bank of any country is responsible for its monetary policy, which includes three major…

Q: The following graph represents the money market in a hypothetical economy. As in the United States,…

A: When the central bank decides to increase the target interest rate, it implements a contractionary…