Homework 7 - percent then what is the quantity of money in...

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PRINCIPLES OF MACROECONOMICS, HOMEWORK 7      DUE 10/29/08 or 10/30/08 NAME ______________________________________________________________ 1.  The economy of Wrexington contains 2000 $1 bills. a.  If the people of Wrexington hold all money as currency, then what is the quantity of money  in the economy? _____________________________________________________________ b.  If the people of Wrexington hold all money as demand deposits and banks maintain 100  percent reserves, then what is the quantity of money in the economy? __________________ c.  If the people of Wrexington hold equal amounts of currency and demand deposits and  banks maintain 100 percent reserves, then what is the quantity of money in the economy?  _________________________________________________________________________ d.  If the people of Wrexington hold all money as demand deposits and banks maintain a reserve ratio of 40 
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Unformatted text preview: percent, then what is the quantity of money in the economy? _________________________________________________________________________ 2. Fill in the following blanks with “increases” or “decreases”: a. When the Fed buys bonds, the money supply ___________________________________. b. When the Fed decreases reserve requirements, the money supply ___________________. c. When the Fed increases the discount rate, the money supply _______________________. d. When the Fed sells bonds, the money supply ____________________________________. e. When the Fed decreases the discount rate, the money supply _______________________. f. When the Fed increases reserve requirements, the money supply ____________________....
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This note was uploaded on 09/15/2011 for the course 06E 002 taught by Professor Kim during the Spring '08 term at University of Iowa.

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