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Question
Please help me with this assignment. If work is done well I will leave a very good tip.
Assume that the United States begins defcit spending to Fund new social
welFare programs.
a.
Using a correctly labeled loanable Funds graph, show and explain the
impact oF the new spending on real interest rates in the United
States.
b.
Explain the impact oF the change in interest rates you identifed in
part (A) on each oF the Following:
i.
Capital investment
ii.
Long-term economic growth
iii.
The international value oF the U.S. dollar
Question 2
(Essay Worth 15 points)
Meagan deposits $750 From her piggy bank into her checking account at
Regions National Bank. The reserve requirement is 10% and the bank has
no excess reserves.
a.
What is the immediate e
f
ect on the M1 measure oF the money
supply oF her deposit? Explain why.
b.
What is the amount oF money the local bank can lend?
c.
Calculate how much money the entire banking system can create.
Show your work.
d.
Give two reasons why money creation may not increase by the
amount you identifed in (c).
(Calculate means show your work on the AP exam)
Question 3
(Multiple Choice Worth 2 points)
You have an opportunity to purchase season tickets For the local
proFessional Football team. The sales representative shows you a color-
coded picture oF the arena. Each color represents a di
f
erent ticket price.
This best illustrates money used as a
store oF value.
medium oF exchange.
unit oF account.
liquid asset.
liability.
Question 4
(Multiple Choice Worth 2 points)
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