Macroeconomics Critical Analysis

Question Description

Was needing some help with these Critical Analysis questions for chapter 13 & 14 please.

 Chapter 13

15) How would the following influence the growth rates of the M1 and M2
money supply figures over time?

a) An increase in the quantity of U.S. currency held overseas

b)  A shift of funds from interest-earning checking deposits to money market mutual

c)  A reduction in the holdings of currency by the general public because debit cards
have become more popular and widely accepted

d) The shift of funds from money market mutual funds into stock and bond
mutual funds because the fees to invest in the latter have declined

17) Suppose that the reserve requirement is 10 percent and the balance sheet
of the People’s National Bank looks like the accompanying example.

a) What are the required reserves of People’s National Bank?  Does the bank have any excess reserves?

b) What is the maximum loan that the bank could extend?

c) Indicate how the bank’s balance sheet would be altered if it extended
this loan.

d) Suppose that the required reserves were 20 percent.  If this were the case, would the bank be in a position to extend any additional loans? Explain.

Chapter 14

4) Historically, shifts toward a more expansionary monetary policy have often
been associated with increases in real output. Is this surprising?  Why or why
not?  Can an expansion in the money supply increase real output and employment? 
Why or why not?

5) What impact will an unanticipated increase in the money supply have on
the real interest rate, real output, and employment in the short run?  How will expansionary monetary policy affect these factors in the long run?  Explain.

14) Did monetary policy contribute to the economic crisis of 2008?  Why or why not?  How did monetary policy makers respond to this crisis?  Has their response created an environment for future stability and growth? Explain. 


Final Answer

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