ECON2123+PS2-fa13

She withdraws no money until the fourth day when she

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Unformatted text preview: until the fourth day, when she withdraws the whole amount necessary to pay for her credit card purchases over the previous four days. (e) Recomputed your answer to part (a). (1 mark) (f) Recomputed your answer to part (b). (1 mark) (g) Based on your previous answers, what do you think has been the effect of ATMs and credit cards on money demand? (2 marks) 4. Use the balance sheets to analyze the effects of open market operations. (5 marks) (a) Suppose a central bank bought a $10,000 bond from a commercial bank, and to finish this transaction, the central bank put a credit of $10,000 into the commercial bank’s account with the central bank in exchange for bonds. What changes happen to the central bank’s balance sheet? What changes happen to the commercial bank’s balance sheet? (b) Suppose a centra...
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