{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

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

This preview shows pages 1–2. Sign up to view the full content.

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?

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

View Full Document
2 4. (10 homework points) If the Fed’s international reserves
This is the end of the preview. Sign up to access the rest of the document.

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?...
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern