problem1. Suppose that the real output (RO) for a country is anticipated to be 2.4 million products.

a. If the price level (PL) is $250 per product, what will be the amount of gross national product (GDP)?

b. Now suppose the GDP is projected to be $8 million next year. What will the PL of products need to be to reach the GDP target?

c. Now suppose that the RO of 2.4 million products in composed of equal amounts of two types of products. The first product sell for $100 each and the second product sells for $500 each. What will be the size of GDP?

problem2. ATM Banc has the following liabilities and equity categories: Deposits $9 million other liabilities $4 million Owners’ capital? Total liabilities and capital?

a. What would be the bank’s total liabilities and capital when owners’ capital was half the size of other liabilities?

b. When total liabilities and capital was $15.5 million, what would be the amount of loans?

c. When total liabilities and capital was $14 million, and $1 million of deposits were withdrawn from the bank, what would be the amount of owners’ capital?

problem3. The Friendly National Bank holds $50 million in reserves at its Federal Reserve District Bank. The required reserves ratio is 12 percent.

a. When the bank has $600 million in deposits, what amount of vault cash would be needed for the bank to be in compliance with the required reserves ratio?

b. When the bank holds $10 million in vault cash, find out the required reserves ratio which would be needed for the bank to evade a reserves deficit.