Money-Supply-economics-homework-help

PLEASE NOTE THAT I ONLY NEED (f) done:

The attached show the solutions for the rest. Please help me with only (f), nothing else. It is a quick question

Monetary Policy: Suppose the commercial banks keep no excess reserves, and people deposit all money they receive into the banking system. Suppose the required reserve ratio is 0.2. Suppose the Federal Reserve wants to increase the monetary base by $1,000,000. 

(a) How will the Fed do this? 

(b) Show how this will initially affect the balance sheet of Bank of America. 

(c) Show how the money expansion process will affect the balance sheets of two more commercial banks, showing the change in the overall money supply at each step. 

(d) How much did money supply change as a result of the Fed’s actions. (Hint: Use the simple money multiplier) 

(e) How much would money supply change as a result of the Fed’s action if banks held an additional 5% of cash reserves? 

(f) Now suppose that in addition to the 5% of additional bank reserves from part (e) we assume that individuals and firms hold 25% of their money in cash versus checking deposits, how much would money supply change as a result of the Fed’s action?

 

Do you need a similar assignment done for you from scratch? We have qualified writers to help you. We assure you an A+ quality paper that is free from plagiarism. Order now for an Amazing Discount!
Use Discount Code "Newclient" for a 15% Discount!

NB: We do not resell papers. Upon ordering, we do an original paper exclusively for you.