Business-7789062

Business-7789062 - because they are liable to pay savings deposits and time deposits Finally the liabilities of banks are related to M3 because

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Question: 3. How are the liabilities of banks related to monetary aggregates, that is, different measures of money? Solution: The liabilities of banks are related to M0 because banks are obliged o keep minimum reserves with the central bank. The liabilities of banks are related to M1 because banks are liable to pay demand deposits and checkable deposits. Further, the liabilities of banks are related to M2
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Unformatted text preview: because they are liable to pay savings deposits and time deposits. Finally, the liabilities of banks are related to M3 because they are liable to pay large time-deposits, and honor short term repurchase agreements. Essentially, there are four empirical measures of money. The banks liabilities are related to each of the money aggregates....
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This note was uploaded on 02/21/2012 for the course ACT 492 taught by Professor Ngo during the Fall '11 term at Colorado.

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