Chapter 15 Problems

# What is the quantity of money demanded by the nation

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What is the quantity of money demanded by the nation? a. What is the quantity of money demanded by the nation? Answer: 2

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Chapter 15 HW b. By how much will the quantity of money demanded rise if the nation’s nominal GDP rises to \$220 billion? Answer: c. What happens to the nation’s demand for money if its nominal GDP increases by 10 percent each year? Answer: 4 . Suppose that the domestic credit created by the nation’s monetary authorities is \$8 billion and the nation’s international reserves are \$2 billion, and that the legal reserve requirement for the nation’s commercial banking system is 25 percent. (a) How much is the monetary base of the nation? Answer: (b) What is the value of the money multiplier? Answer: (c) What is the value of the total supply of money of the nation? Answer: 5. Assuming fixed exchange rates, find the size of the deficit or surplus in the balance of payments of the nation described in 3
Chapter 15 HW a. Problems 3a and 4 Answer: b. Problems 3b and 4 Answer: c. Problems 3c and 4 Answer: 6. Explain how the BOP disequilibrium is corrected if monetary authorities do not change the domestic component of the nation’s monetary base. a. In Problem 5b b. In Problem 5c 4

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Chapter 15 HW c. What happens if monetary authorities completely sterilize, or neutralize,
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