This preview shows page 1. Sign up to view the full content.
Unformatted text preview: view that American ²nancial crisis has triggered the world wide recession 2. (a) During the Great Depression, up to the Bank Holiday of 1933 , the American Money Supply fell, even though the Money Base was slightly rising. Explain algebraically with the formula of the money multiplier, how this phenomenon was caused by which party due to what motives. (b) Given the public pessimism about the economy, as the interest rate was near the Zero Bound, would it make any di/erence if the Federal Reserve reduces the minimum deposit reserve requirement? (c) Explain with an asset market diagram, what happens to individual behavior if sustained de±ation is to stay? 1...
View Full Document
This note was uploaded on 03/10/2010 for the course ECON 3140 taught by Professor Mbiekop during the Spring '07 term at Cornell.
- Spring '07