hw6f11 - decrease by $50 billion, US Treasury deposits with...

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Print name___________________ Sign name _____________________ Recitation TA and time ____________________ Econ 520 F11 Homework 6 10/25, 10/27, due 10/28 For full credit, show your calculations on each computational problem. 1. (10 homework points) If the monetary base is $900 billion and the bank expansion multiplier is 2.5, what is the money stock? 2. (10 homework points) If the public’s desired ratio of currency to checkable deposits is 0.42, and the banks’ desired ratio of reserves to checkable deposits is 0.08, what is the bank expansion multiplier? 3. (10 homework points) If the Fed’s holdings of US Government securities increase by $100 billion, its international reserves decrease by $50 billion, US Treasury deposits with the Fed decrease by $20 billion, Fed Loans to dealers increase by $10 billion, and all other factors affecting the base remain constant, what is the change in the base?
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2 4. (10 homework points) If the Fed’s international reserves
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Unformatted text preview: decrease by $50 billion, US Treasury deposits with the Fed decrease by $20 billion, and Fed Loans to dealers increase by $10 billion, what defensive open market operation is required to prevent any change in the base, if all other factors affecting the base remain constant? 5. (5 HW points) If the Fed directly buys $300 billion in bank holding company preferred stock, what is the change in the base, if all other factors affecting the base remain constant? 6 (5 HW points) If the Fed buys $300 billion of new Treasury securities directly from the Treasury, but the Treasury temporarily holds the proceeds on deposit with the Fed, what is the change in the base, holding all other factors constant? 7. (5 HW points) If the Treasury spends $300 billion that it has had on deposit with the Fed on bank holding company preferred stock, what is the change in the base, holding all other factors constant?...
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This note was uploaded on 11/20/2011 for the course FINANCE 640,722 taught by Professor Chabiyo,reeves during the Fall '11 term at Ohio State.

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hw6f11 - decrease by $50 billion, US Treasury deposits with...

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