{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

hubbard_econ01_eoca_25-30

hubbard_econ01_eoca_25-30 - Chapter 25 Answers to...

Info icon This preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
228 Chapter 25 Answers to End-of-Chapter Problems and Applications 2. As the Chinese government was being defeated, Chinese paper currency was ceasing to be fiat money, but, at least in Japan, had become a commodity money. 4. There is no effect on M1 because both currency and checking account balances are included in that measure of the money supply. Because M1 is not affected, neither is M2. 6. Deposits. Having more deposits allows these banks to make loans and other investments on which they are able to make profits. 8. There is no impact. The $100 was part of M1 when it was in your checking account and is still part of M1 when you hold it as currency. 10. Yes. The statement is correct. When bank reserves increases, they increase their loans, which creates new checking account deposits, thereby expanding the money supply. 12. a. Assets Liabilities Reserves +$2,000 Deposits +$2,000 Bank of America
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Money, Banks, and the Federal Reserve System 229 b. c. Assets Liabilities Reserves +$2,000 Deposits +$2,000 Bank of America Loans +$1,600 Deposits +$1,600 Assets Liabilities Reserves +$400 Deposits +$2,000 Bank of America Loans +$1,600 Assets Liabilities Reserves +$1,600 Deposits +$1,600 Citibank Bank
Image of page 2