C11E Macroeconomics Ashworth College Assignment 08

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The name of the book is Macrorconomics if you have any question you can contact me

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ASSIGNMENT 08 C11E Macroeconomics Directions: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English, spelling and grammar. Sources must be cited in APA format. Your response should be four (4) double-spaced pages; refer to the "Assignment Format" page located on the Course Home page for specific format requirements. Part A 1. Why is the money multiplier in the United States smaller than the inverse of the required reserve ratio? Provide one (1) reason. 2. Explain why depositing cash into a checking account does not change the money supply. Provide one (1) supporting fact. 3. Explain why the money supply does not change when one individual writes a check to another. Provide one (1) supporting fact. Part B 1. Describe one (1) reason why the flexibility of wages and prices tend to favor the Keynesian economic view in the short run and one (1) reason why the flexibility of wages and prices tend to favor the classical economic view in the long run. 2. Refer the figure below and explain what happens in each graph (A, B, and C) when an economy is moving from a recession (point a) back to full employment. ...
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NicholasI
School: University of Maryland

Hi, kindly find attached

Running head: ASSIGNMENT 8

1

Assignment 8
Name
Institution
Professor
C11E Macroeconomics
Date

ASSIGNMENT 8

2
Part A

1. Why is the money multiplier in the United States smaller than the inverse of the
required reserve ratio? Provide one (1) reason.

The Money Multiplier in the U.S is for some reasons smaller than the inverse of the
required reserve ratio. The money multiplier is basically the amount of money that banks can
generate with every dollar of the reserves. The reserve ratio refers to the percentage of deposits
that banks keep in the form of liquid reserves. In the real world situation, the actual money
multiplier is substantially smaller than the theoretical money multiplier (Goodwin et al., 2015).
One reason for this variation is economic transactions that result in cash outflows such as taxes,
import spending, and savings. When consumer purchase imports there is an economic outflow
because money exists the economy. Similarly, when people pay taxes, a percentage of their
income is deducted and through this fraction of money exits the economic cycle. Also,
consumers do not use spent all their cash; thus not all money is circulated in the economy; they
save a significant amount of their income. For this reason, the U.S money multiplier is
significantly smaller than the inverse of the required reserve ratio.

2. Explain why depositing cash into a checking account does not change the money
supply. Provide one (1) supporting the fact.
When cash is deposited into a checking account, there is no change in the money supply
(...

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Anonymous
awesome work thanks

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