money creation and the money multiplier work sheet

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pzrnqbe19

Economics

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I WILL NOT RELEASE THE MONEY UNLESS THERE ARE GRAPHS DRAWN AND INCLUDED. every time I have needed graphs they are never included when I get the answers back. ALL information is attached in document. please read thoroughly. thank you.

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It is time once again to practice writing a free response question (FRQ). On the AP Exam, you may have a FRQ from this unit. When you answer these questions, there is a specific format that you must follow. Please read the instructions below so you will understand how to correctly answer a FRQ. • • • • • • • • Answer in clear, concise language. You are not writing an essay. Following directions is important; the first word in a FRQ can tell you a lot. Identify means a one or two word answer; explain always means in words and pictures where appropriate; how means how and why. Include correctly drawn and labeled graphs and diagrams to support your answer where needed, even if the question does not specifically tell you to draw one. Use blue or black ink to create your drawings. You will be required to do this on the AP Exam. If you like to erase, use an Erasermate™ ink pen. Separate and label the answer in the same manner in which the question is written. For example if there is a part A, B (i), B (ii), and C, your answer should have a part A, B (i), B (ii), and C. Answer the questions in logical order; they are designed that way for a reason. Be consistent with your answer. You may use standard economic abbreviations. RGDP for real GDP is fine. Once you complete the assigned review, answer the following question: Please view the Scoring Guidelines before beginning the assessment. The Question Shown below is a simplified balance sheet for Sharpeland Bank. Assets Liabilities Required Reserves $40,000 Excess Reserves $25,000 Government Bonds $100,000 Checkable Deposits $200,000 Loans $30,000 Building & Fixtures $15,000 Owner’s Equity $10,000 1. Calculate the required reserve ratio. (Show your work) 2. Assume that Pam wants to borrow money to pay for a new car from Sharpeland Bank. a. What is the maximum amount that Sharpeland Bank can loan out if it wants to keep all of its bonds? b. What is the maximum amount that the banking system can create given the balance sheet above? 3. Assume instead that Michael withdraws $10,000 in cash from his checking account at Sharpeland. a. By how much will Sharpeland Bank’s reserves change based on Michael’s withdrawal? (Be specific.) b. What is the immediate effect of the withdrawal on the M1 measure of the money supply? Explain. c. As a result of the withdrawal, what is the new value of excess reserves for Sharpeland Bank based on the reserve requirement from part (a)? On the AP Exam, you would normally have about 12.5 minutes to answer this question. It would be weighted to equal 7.5 points. Remember: you can view instructions for how to create and submit graphs in the Lesson Resource Packet in the backpack.
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RUNNING HEAD: ECONOMICS FREE RESPONSE

Title: Economics Free Response Questions
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ECONOMICS FREE RESPONSE

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ECONOMICS FREE RESPONSE QUESTIONS
Questions
1. Required reserve ratio = $40,...


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