Mint
Chapter 14 Homework
2.1 Depository institutions are financial institutions that obtain funds mainly by accepting deposits from the public—both businesses and households. Depository institutions act as intermediaries because they profit by paying a lower interest rate to savers than they charge borrowers.
3.1 The Fed has the power to issue currency, buy and sell government securities, provide loans to member banks (at a rate termed the discount rate), clear checks between banks, and require member banks to hold reserves equal to a specified fraction of their deposits.
4.1 Bank mergers will help banks to diversify their portfolio of loans among different regions and perhaps achieve an optimal size. Banks merge because they want more customers and expect the resulting higher volume of transactions to reduce operating costs per customer
4.2 Economists argue that the combination of deregulation and deposit insurance encouraged some banks on the verge of failing to take bigger risks to “because their depositors would be protected by deposit insurance.
Chapter 15 Homework
1.1 M1 = Currency and coin held by nonbanking public + checkable deposits + traveler’s check (438 + 509 + 18) = $965 billion; M2 = M1 + small denomination time deposits + savings deposits + money market mutual fund accounts = (965 + 198 + 326 + 637) = $2.126 trillion.
3.1. The total change in the money supply would now be $1,000(1/0.15) = $6,666.67.
Chapter 16 Homework 2.2 The economy slides upward along AD' as higher wage rates cause short-run aggregate supply to shift upward to the left. The process continues until the actual price level again equals the expected price level. This occurs at point c, where AD' and SRAS' intersect at potential output. The final result is a higher price level with no change in real GDP. 2.3 a. It should decrease the money supply. b. It should sell securities. c. The interest rate increases, the quantity of money demanded
2.1 Depository institutions are financial institutions that obtain funds mainly by accepting deposits from the public—both businesses and households. Depository institutions act as intermediaries because they profit by paying a lower interest rate to savers than they charge borrowers.
3.1 The Fed has the power to issue currency, buy and sell government securities, provide loans to member banks (at a rate termed the discount rate), clear checks between banks, and require member banks to hold reserves equal to a specified fraction of their deposits.
4.1 Bank mergers will help banks to diversify their portfolio of loans among different regions and perhaps achieve an optimal size. Banks merge because they want more customers and expect the resulting higher volume of transactions to reduce operating costs per customer
4.2 Economists argue that the combination of deregulation and deposit insurance encouraged some banks on the verge of failing to take bigger risks to “because their depositors would be protected by deposit insurance.
Chapter 15 Homework
1.1 M1 = Currency and coin held by nonbanking public + checkable deposits + traveler’s check (438 + 509 + 18) = $965 billion; M2 = M1 + small denomination time deposits + savings deposits + money market mutual fund accounts = (965 + 198 + 326 + 637) = $2.126 trillion.
3.1. The total change in the money supply would now be $1,000(1/0.15) = $6,666.67.
Chapter 16 Homework 2.2 The economy slides upward along AD' as higher wage rates cause short-run aggregate supply to shift upward to the left. The process continues until the actual price level again equals the expected price level. This occurs at point c, where AD' and SRAS' intersect at potential output. The final result is a higher price level with no change in real GDP. 2.3 a. It should decrease the money supply. b. It should sell securities. c. The interest rate increases, the quantity of money demanded