Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

In this problem, we are going to find out the money multiplier one year prior to the Great Recession (12/2006) and compare it to the money multiplier five years hence (12/2011). The implication, as you may have guessed, is that since the Fed has been paying interest on excess reserves (10/2008), the excess reserve to deposit ratio has risen which implies a lower money multiplier.

Data you need for problem 1:

Monetary Base Dec 2006: 837.701 ; Dec 2011: 2603.487

Excess Reserves Dec 2006: 1.863 ; Dec 2011: 1502.206

Currency Dec 2006: 749.6 ; Dec 2011: 1001.5

Required Reserves Dec 2006: 41.419 ; Dec 2011: 96.510

Demand Deposits Dec 2006: 609.9 ; Dec 2011: 1154.6

a) find out the money multiplier for Dec 2006, one year prior to the Great Recession. Please show all work.

b) find out the money multiplier for Dec 2011, five years hence and a little more than three years after the Fed got the authority to pay interest on excess reserves. See the Federal Reserve's press release.

c) What is the percent change in the money multiplier in this five year period?

d) Now consider the change in the monetary base during this same five year period and compare it to the change in excess reserves. Is it a true statement to say most of the open market purchases that caused the monetary base to "blow up" ended up on bank's balance sheets as excess reserves. Be very specific with your answer using actual numbers. Which change is bigger and why?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M946394

Have any Question? 


Related Questions in Microeconomics

Q1 in quantity theory of money model mv py assume that v

Q1. In quantity theory of money model, MV = PY, assume that V is constant, M is growing at 6% per year, Y is growing at 3%. a. If r = 2, what is i? b. If the Fed reduces the money growth rate by 2% points per year, what ...

The purpose of an assignment is to ensure that the learner

The purpose of an assignment is to ensure that the Learner is able to: - Use methods of enquiry and research in a disciplined field. - Interpret and evaluate text. - Have a sound understanding of key principles and theor ...

Samsung smartphone manufacturer vs google inc search engine

Samsung (smartphone manufacturer) Vs. Google Inc. (search engine) - economic and financial analysis Objectives: • Assess and compare the market types of Google Inc.(as a search engine) and Samsung • Determine the various ...

Assignmentin this assignment you will discuss the role of

Assignment In this assignment, you will discuss the role of entrepreneurship in improving the economic condition of countries and individuals and understand the manner in which this perception has spread around the world ...

Create the demand and supply of the labor market and demand

Create the demand and supply of the labor market and demand and supply of the goods market using the production function and consumption utility function given. Solving the equations and graphing the models have to be th ...

Economics and quantitative analysis assignmenttopic -

ECONOMICS AND QUANTITATIVE ANALYSIS ASSIGNMENT TOPIC - REGRESSION ANALYSIS Instructions - Background One of the biggest challenges in the higher education sector has been the recent growth of online universities. The Onl ...

Question 1which of the following levels of supply chain

Question 1 Which of the following levels of supply chain information systems is most likely to provide the firm with a competitive advantage? A.Strategic planning B.Decision analysis C.Management control D.Transaction sy ...

Project-listen to this video asafter you work on your graph

Project- Listen to this video as/after you work on your graph. The lecture is on the 'Aftermath of the Financial Crisis' given by Ben Bernanke in March 29 th 2012. https://www.c-span.org/video/?305198-1/ben-bernanke-lect ...

Assignmentreview the cba provided in the resources section

Assignment Review the CBA provided in the resources section between the Trustees of Columbia University and Local 2110 International Union of Technical, Office, and Professional Workers. Describe how this is similar to a ...

Instruction please answer all questions all questions carry

Instruction: Please answer ALL questions. All questions carry equal marks. Please do not write over 2000 words for the entire assignment. 1. a. Using the graph shown, analyze the effect a $300 price ceiling would have on ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen