i need this done as soon as possible.

For the Excel questions below, you will submit hard copies of your graphs along

with the rest of your assignment and an electronic copy of your Excel le via

Sakai.

1. (20 points) Go to the Federal Reserve’s web site (www.federalreserve.gov). Under

Economic Research and Data link, you will nd the Data Download Program if you

scroll down the page. Download the seasonally adjusted monthly M1 and M2 data be-

tween 1959-2010. Then, go to the BLS web site to download the not seasonally adjusted

monthly CPI data for the same period. Note that the two data sets are organized in

di erent ways. You will need to work with the data to put them in the same format.

This will help you learn how to organize data in general and use Excel. After you put

the data together, use CPI values to calculate the real M1 and M2 values.

(a) (10 points) Plot the nominal M1 and real M1 data against time on the same

graph. Make sure your graph is perfectly labeled.

(b) (10 points) Plot the nominal M2 and real M2 data against time on the same

graph. Make sure your graph is perfectly labeled.

2. (40 points) Go to the web site of the Federal Reserve Economic Data by the St.

Louis Fed (http://research.stlouisfed.org/fred2/). Under CATEGORIES, you will nd

the “Money, Banking, & Finance” category. Under that, there is a link for “Monetary

Data”. Get the Money Multiplier data between January 2003 and December 2011

following that link. When you click on “download data” you get a few options. You

will need to choose monthly frequency with the aggregation method of “average”.

1(a) (10 points) Plot the money multiplier data against time. Make sure your graph

is perfectly labeled.

(b) (10 points) Notice the drastic change in the money multiplier. Do research on

the internet to nd out the reason for it, and explain why it would cause such a

change in the money multiplier.

Go back to the Federal Reserve web site (www.federalreserve.gov) and follow

the links to the Data Download Program. Under Money Stock and Reserve

Balances”, you will see Aggregate Reserves of Depository Institutions and the

Monetary Base – H.3″. Click on the link, and download the historical data for

Table 2 (Aggregate Reserves of Depository Institutions (not adjusted for changes

in reserve requirements{NSA)) between January 2003 and December 2011. This

table reports total reserves and its components for the whole economy. Using

total reserves and excess reserves columns, calculate the excess reserves to total

reserves ratio.

(c) (10 points) Plot the money multiplier and the excess reserves to total reserves

ratio on the same graph. Make sure your graph is perfectly labeled.

(d) (5 points) Explain what you see on the graph. Explain why these two variables

are related in this way (using the theory we learned in class).

(e) (5 points) Explain why banks may have changed their excess reserves decisions

in the way suggested by your graph.

3. (10 points) Select the correct answer and provide a brief explanation using a balance

sheet. If the Federal Reserve purchases a $2,000 bond from a bond dealer who deposits

the check in a bank, what changes will occur on that bank’s balance sheet?

(a) Reserves, checking deposits, total assets, and total liabilities will all increase by

$2,000.

(b) Reserves and assets will increase by $2,000; checking deposits and total liabilities

will decrease by $2,000.

(c) Reserves and total assets will decrease by $2,000; checking deposits and total

liabilities will increase by $2,000.

(d) Reserves and total liabilities will decrease by $2,000; checking deposits and total

assets will increase by $2,000.

(e) Reserves and assets will increase by $2,000; checking deposits and total assets will

decrease by $2,000.

24. (10 points) Select the correct answer and provide a brief explanation. (SHOW YOUR

WORK) If the required reserve ratio is 0.2, and a bank has $100 million in checking

deposits and $40 million in property and buildings, it must hold reserves of at least

(a) $28 million

(b) $20 million

(c) $26 million

(d) $12 million

(e) $8 million.

5. (10 points) Assume that when $100 of new deposits enter the banking system, the

money supply ultimately increases by $1000. Assume also that no bank holds excess

reserves and that the entire money supply consists of bank deposits. If, at a point in

time, reserves for all banks amount to $800, then at that same point in time, deposits

for all banks amount to:

(a) $100

(b) $800

(c) $1000

(d) $7200

(e) $8000

(f) Deposits cannot be calculated with the information given.

6. (10 points) Select the correct answer and provide a brief explanation. (SHOW YOUR

WORK) Given the balance sheet below and assuming a required reserve ratio of 20

percent, which of the following statements is correct?

Assets Liabilities

Property $10 Checking deposits $50

Government bonds $20 Shareholders’ Equity $30

In accounts with the Fed $15

Vault cash $5

Loans $30

(a) It is failing to meet its reserve requirement.

(b) It is just meeting its reserve requirement, but has no excess reserves.

(c) It is meeting its reserve requirement, and has $5 million in excess reserves.

(d) It is meeting its reserve requirement, and has $10 million in excess reserves.

(e) It is meeting its reserve requirement, and has $15 million in excess reserves

 
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