The questions below draw on the material in Chapter 11 and the associated lecture material. 1. What distinguishes money from other assets in the economy? Money is the most liquid asset. 2. What is commodity money? What is fiat money? Which kind do we use? Commodity money may be used for other purposes. Fiat money is useful only as money. 3. What are demand deposits? Why should they be included in the stock of money? Demand deposits are balances in bank accounts that can be accessed on demand by writing a check. They are money, since they are generally accepted as a medium of exchange. 4. Which of the following are money in the U.S. economy? Which are not? Explain your answers by discussing each in terms of the three functions of …show more content…
a Fed purchase of US government securities from the public AR (+) RR rise by a fraction of the increase in AR ER (+) 8. Suppose that the Fed buys $2 million in US government securities from Alexander, a private bond trader. a. Use balance sheets to show the effects of this transaction on the appropriate accounts of a commercial bank and the Federal Reserve. FR CB Assets Liabilities Assets Liabilities US gov sec CB Deposits Dep at FR Checking Dep + 2m + 2 m + 2 m +2m b. Assuming a required reserve ratio of 10% and a banking system that is fully loaned up initially, show the effects on AR, RR, and ER. AR +2,000,000 RR +200,000 ER + 1,800,000 c. What is the maximum possible expansion in the money supply from new commercial bank lending? 1/.1 x 1.8m = 18m d. What is the total change in the money supply, including both the Fed purchase and the lending by banks? Fed purchase + bank lending = Total change 2m + 18m = 20m 9. Why can=t the Fed control the money supply with perfect precision? First, the Fed cannot directly control the lending activity of banks. In particular, banks may choose to hold more excess reserves (as loan-loss reserves or to cash paychecks, for example) and not increase their lending activity. Second, the Fed cannot control the amount of funds that households choose to hold as deposits in banks. Should people choose to hold more cash, the reserves of the banking system would fall and less money
Assuming the Fed chooses to shrink the money supply, explain how each of the three tools would be used. If the fed chooses to shrink the money supply
4. Explain the meaning of “strong” currency and “weak” currency. What are the advantages and disadvantages of each?
The topics for these two papers are noted below. Refer to at least one outside source in addition to your text as you prepare each of these papers.
Kerly Tweeten Assignment #3 D. 1. Online businesses is gradually evolving. 2. The children was playing in the backyard. 3.
Using Sources A, B, and C and your own knowledge account for the founding of the U.S. Federal Reserve and analyze how its role in economic policy has developed since then.
Below are the questions you must answer for the Chapter 7 homework. All questions are worth 1 point except for the short answer. The homework must be done on a word processor. Your answers should be in your own words. Copying directly from the textbook without proper citation is plagiarism.
Over the past few years we have realized the impact that the Federal Government has on our economy, yet we never knew enough about the subject to understand why. While taking this Economics course it has brought so many things to our attention, especially since we see inflation, gas prices, unemployment and interest rates on the rise. It has given us a better understanding of the effect of the Government on the economy, the stock market, the interest rates, etc. Since the Federal Government has such a control over our Economy, we decided to tackle the subject of the Federal Reserve System and try to get a better understanding of the history, the structure, and the monetary policy of the power that it holds.
c. Do you think it is best to keep track of finances using a check register, a bank statement, or both? Why? (2-4 sentences. 1.0 points)
The news media as most other print, radio, and television media are in a constant competition for ratings. A direct result of this rating competition is the sensationalizing of the media reports received by the general public. One of the most significant problems resulting from the news media’s misrepresentation of crime is the mistrust it creates between the general public and the criminal justice system. If the public were only to believe what is reported by the various news media, then the assumption would have to be that all the crime in this country is at the felonious level in which someone is usually killed with a gun. According to Bohm and Haley (2011), the distribution of police calls indicates that the majority of crime is anything
These few lines will be extensively discussed and analyzed in the remainder of the book as the topics for chapters two through five.
The experimentation and research that delves into the mind, social interactions, and the history of social cultures can all relate to why peoples and groups partake in certain social cultural practices. Psychology relates to the study of the human mind. It also studies the brain’s functions and uses said functions to explain behavior. Sociology pertains to societies throughout time, being defined as the study of development, structure, and functioning of human societies. Anthropology is defined as the study of human societies and cultures and their development. These three fields of study work to explain behavior and its causes.
15. What is the primary role of the Federal Reserve? What is the significance of this role?
Once you have read the textbook chapter and the Reading, answer discussion questions 1, 3- 5 (ignore questions 2 and 6).
Please use the textbook, the PPT lecture handout of Chapter 1, and internet to answer the following six questions: