GSB 611 HW7.docx - Nydia Perez GSB 611-99 Homework Week 7...

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Nydia Perez GSB 611-99 Homework Week 7 Chapter 21 1. What distinguishes money from other assets in the economy? Money, in the form of cash is used regularly to buy goods and services. Another form of money or assets that people have is wealth, such as in stocks and bonds, that although it is considered money, it cannot be used to buy goods and services, as you would with cash. The more cash you have access to, the easier it is to buy goods and services. On the other hand, the more wealth you have, the more money you will have for future use. 9. What are reserve requirements? What happens to the money supply when the Fed raises reserve requirements? Reserve requirements are regulations that set the minimum amount of reserves that banks must hold against their deposits. Reserve requirements influence how much money the banking system can create with each dollar of reserves. If the Fed raises reserve requirements, then banks must put more money aside and less money will be available for loans, it also lowers the money multiplier, and decreases the money supply.
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  • Fall '17
  • Accounting, Economics, Fed, short-run aggregate-supply curve, aggregate-supply curve, aggregate-demand curve

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