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3. Historically, shifts towards a more expansionary monetary policy have often been associated with increases in real output. (25 points)
a) Is this surprising? Why or why not?
b) Can an expansion in money supply increase real output and employment permanently? Why or why not?
4. Suppose you deposit $1000 scholarship check in the bank. If the required reserve ratio is 10%, explain the process through which the banking system will create new money. How much money can potentially be created by the entire banking system as a result of this deposit? (10 points)
a) Is this surprising? Why or why not?
b) Can an expansion in money supply increase real output and employment permanently? Why or why not?
4. Suppose you deposit $1000 scholarship check in the bank. If the required reserve ratio is 10%, explain the process through which the banking system will create new money. How much money can potentially be created by the entire banking system as a result of this deposit? (10 points)
2. Trace the impact of open market sales (restrictive monetary policy) on (1) the money market, (2) the loanable funds market and (3) the real economy in the short run (assuming that the economy starts at equilibrium in the goods and services market). How will the economy adjust to this shock in the long run (hint: I need you to trace the impact through three markets… so I am expecting 3 graphs for each of the three markets… For the G&S market talk about adjustment of factor costs)
1. Use the money demand and money supply model to show graphically and explain the effect on nominal interest rates of the Federal Reserve’s open market purchase of Treasury securities.
Prepare the Trial Balance of Mojere & Sons from the following details for the month of March 2006.
March 1 Started business with N8,000 in the Bank
March 2 Bought goods on credit from the following persons: K. Hayford N760; Miller N270; Bukola N560
March .5 Cash Sales N870
March.6 Paid wages in Cash N140
March.7 Sold goods on credit to H. Elijah N 350;Leke N420; Jacob N720
March 9 Bought goods for Cash N460
March 10 Bought goods on credit from M. Miller N570, Bukola N980
March 12 Paid Wages in Cash N140
March 13 Sold goods on credit to Leke N320, Jacob N230
March 15 Bought goods by cheque from Betha Ltd N500
March 17 Paid M . Miller by cheque N840
March 18 Returned goos to Bukola N200
March 21 Paid Betha Ltd a cheque for N500
March 24 Jacob paid up his account by cheque N950
March 27 Returned goods to K. Hayford N240
March 30 J. Elesusu lent N600 by Cash
March 31 Bought a motor van by cheque N4,000
March 1 Started business with N8,000 in the Bank
March 2 Bought goods on credit from the following persons: K. Hayford N760; Miller N270; Bukola N560
March .5 Cash Sales N870
March.6 Paid wages in Cash N140
March.7 Sold goods on credit to H. Elijah N 350;Leke N420; Jacob N720
March 9 Bought goods for Cash N460
March 10 Bought goods on credit from M. Miller N570, Bukola N980
March 12 Paid Wages in Cash N140
March 13 Sold goods on credit to Leke N320, Jacob N230
March 15 Bought goods by cheque from Betha Ltd N500
March 17 Paid M . Miller by cheque N840
March 18 Returned goos to Bukola N200
March 21 Paid Betha Ltd a cheque for N500
March 24 Jacob paid up his account by cheque N950
March 27 Returned goods to K. Hayford N240
March 30 J. Elesusu lent N600 by Cash
March 31 Bought a motor van by cheque N4,000
what is a U.S. weak dollar?
explain how and why the relationship between demand curve and marginal revenue curve differs between a unregulated monopoly and a perfect competitive firm.
What is the difference between gross domestic (GDP) and gross national product (GNP) and which is likely to be lower in developing countries? Why?
You are given the following data in billions of dollars on your country’s economy:
Investment – 140, Government spending = 120, Exports = 80, Imports = 60, Autonomous consumption = 100, marginal propensity to save = 0.30.
a) Compute the consumption and saving functions for this economy and indicate the assumptions used. (4 Marks)
b) Compute the equilibrium level of income. (4 Marks)
c) Determine the equilibrium level of consumption and savings. (2 Marks)
d) Define and compute the multiplier. (2 Marks)
e) You are given that the full employment level of national income is 733 billion. Would this economy be experiencing deflationary of inflationary gap? Why? What is the magnitude of the gap and what could the government do to remove it? (4 Marks)
f) The government decided to increase its spending by 50 billion. Compute the equilibrium level of income and explain why income has or has not changed from the original level. (4 Marks)
Investment – 140, Government spending = 120, Exports = 80, Imports = 60, Autonomous consumption = 100, marginal propensity to save = 0.30.
a) Compute the consumption and saving functions for this economy and indicate the assumptions used. (4 Marks)
b) Compute the equilibrium level of income. (4 Marks)
c) Determine the equilibrium level of consumption and savings. (2 Marks)
d) Define and compute the multiplier. (2 Marks)
e) You are given that the full employment level of national income is 733 billion. Would this economy be experiencing deflationary of inflationary gap? Why? What is the magnitude of the gap and what could the government do to remove it? (4 Marks)
f) The government decided to increase its spending by 50 billion. Compute the equilibrium level of income and explain why income has or has not changed from the original level. (4 Marks)
In 1994, Canada signed a treaty known as NAFTA, the North American Free Trade Agreement. Which of these actions would MOST likely be addressed by NAFTA?
a) establishing an embargo on sugar cane imported from Cuba
b) eliminating tariffs placed on cars imported from the United States
c) creating quotas on all agricultural products made in Mexico
d) ending any trade barriers between Canada and the European Union
a) establishing an embargo on sugar cane imported from Cuba
b) eliminating tariffs placed on cars imported from the United States
c) creating quotas on all agricultural products made in Mexico
d) ending any trade barriers between Canada and the European Union
Economics
You are given the following data in billions of dollars on your country’s economy:
Investment – 140, Government spending = 120, Exports = 80, Imports = 60, Autonomous consumption = 100, marginal propensity to save = 0.30.
a) Compute the consumption and saving functions for this economy and indicate the assumptions used. (4 Marks)
b) Compute the equilibrium level of income. (4 Marks)
c) Determine the equilibrium level of consumption and savings. (2 Marks)
d) Define and compute the multiplier. (2 Marks)
e) You are given that the full employment level of national income is 733 billion. Would this economy be experiencing deflationary of inflationary gap? Why? What is the magnitude of the gap and what could the government do to remove it? (4 Marks)
f) The government decided to increase its spending by 50 billion. Compute the equilibrium level of income and explain why income has or has not changed from the original level. (4 Marks)
Investment – 140, Government spending = 120, Exports = 80, Imports = 60, Autonomous consumption = 100, marginal propensity to save = 0.30.
a) Compute the consumption and saving functions for this economy and indicate the assumptions used. (4 Marks)
b) Compute the equilibrium level of income. (4 Marks)
c) Determine the equilibrium level of consumption and savings. (2 Marks)
d) Define and compute the multiplier. (2 Marks)
e) You are given that the full employment level of national income is 733 billion. Would this economy be experiencing deflationary of inflationary gap? Why? What is the magnitude of the gap and what could the government do to remove it? (4 Marks)
f) The government decided to increase its spending by 50 billion. Compute the equilibrium level of income and explain why income has or has not changed from the original level. (4 Marks)
