INTRODUCTION TO MONEY AND BANKING. Tables and Graphs Part 3
|
|
- Nickolas Cain
- 7 years ago
- Views:
Transcription
1 INTRODUCTION TO MONEY ND BNKING Tables and Graphs Part 3
2 Table of Definitions TR = Total Reserves-Definition* RR = Required Reserves-Definition* ER = Excess Reserves-Definition* r = Minimum Reserve Ratio = RR/DD = ΔRR/ΔDD GS = Government Securities = oans DD = Demand Deposits = ssets = iabilities NW = = Net Worth
3 Figure D-2.1: Bank s Balance Sheet Bank TR = $1m RR = $1m ER = $0m GS = $6m = $4m DD = $10m NW = $1m NOTE: (1) r = 10% and since ER = 0, Bank is fully loaned up. (2) TR = RR + ER. (3) = + NW and TR + GS + = DD + NW.
4 Figure D-2.2: The Banking System s Balance Sheet When r = 10% Banking System TR = $50m RR = $50m ER = $0m GS = $120m = $355m DD = $500m NW = $25m NOTE: r = 10% and since ER = 0, the Banking System is fully loaned up (ER = 0 for all banks in the Banking System).
5 Figure D-2.3: The Fed s Balance Sheet Federal Reserve District Bank GS = $140m MBS =$500m FRN = $80m MBR = $550m T = $10m GS = Government Securities FRN = Federal Reserve Notes MBR = Member Bank Reserves T = Treasury Checking ccount MBS = Mortgage Backed Securities
6 Figure D-2.4a: Purchase of $1M in GS from Bank : The Fed s First Balance Sheet 1. Federal Reserve District Bank GS = $140m MBS = $500m FRN = $100m MBR = $550m T = $10m
7 Figure D-2.4b: Purchase of $1M in GS from Bank : The Fed s Second Balance Sheet 2. Federal Reserve District Bank GS = $141m MBS = $500m FRN = $100m MBR = $551m T = $10m The Fed purchases $1m in GS from Bank.
8 Figure D-2.5a: Bank s First Balance Sheet 1. Bank TR = $1m RR = $1m ER = $0m GS = $6m = $4m DD = $10m NW = $1m NOTE: r = 10% and since ER = 0, Bank is fully loaned up.
9 Figure D-2.5b: Bank s Second Balance Sheet 2.a. The Fed purchases $1m in GS from Bank. b. Money Creation Step: Bank loans out $1m and creates a DD of $1m. c. Clearing Step: $1m is spent and deposited in Bank B. Bank B gains $1m in TR and Bank loses $1m in TR. 2. Bank a. b. c. TR = $2m RR = $1m ER = +$1m GS = $5m = $4m Δ = +$1m ΔTR = -$1m DD = $10m NW = $1m ΔDD = +$1m ΔDD = -$1m
10 Figure D-2.5c: Bank s Third Balance Sheet 3. Bank TR = $1m RR = $1m ER = 0 GS = $5m = $5m DD = $10m NW = $1m NOTE: Bank is fully loaned up and its Balance Sheet balances.
11 Figure D-2.6a: Bank s First Balance Sheet 1. Bank TR = $1m RR = $1m ER = $0m GS = $6m = $4m DD = $10m NW = $1m NOTE: r = 10% and since ER = 0, Bank is fully loaned up.
12 Figure D-2.6b: Bank s Second Balance Sheet 2.a. The Fed purchases $1m in GS from Bank. b. Money Creation Step: Bank loans out $1m and creates a DD of $1m. c. Clearing Step: $1m is spent and deposited in Bank B. Bank B gains $1m in TR and Bank loses $1m in TR. 2. a. b. c. TR = RR = ER = GS = = Bank DD = NW = $1m Δ = ΔDD = ΔTR = ΔDD =
13 Figure D-2.6c: Bank s Third Balance Sheet 3. Bank TR = RR = ER = GS = = DD = NW = NOTE: Bank is fully loaned up and its Balance Sheet balances.
14 Figure D-2.6d: Bank B s First Balance Sheet Bank B TR = $1m RR = $1m ER = $0m GS = $6m = $4m DD = $10m NW = $1m NOTE: r = 10% and since ER = 0, Bank B is fully loaned up.
15 Figure D-2.6e: Bank B s Second Balance Sheet 2.a. check for $1m is deposited in Bank B and Bank B receives $1m in TR from Bank in the clearing step. b. DD Creation: Bank B loans out $0.9m and creates DD of $0.9m. c. Clearing Step: $0.9m is spent and deposited in Bank C. Bank C gains $0.9m in TR and Bank B loses $0.9m in TR. 2. a. b. c. TR = RR = ER = GS = = Bank B DD = NW = Δ = ΔDD = ΔTR = ΔDD =
16 Figure D-2.6f: Bank B s Third Balance Sheet 3. Bank B TR = RR = ER = GS = = DD = NW = NOTE: Bank B is fully loaned up and its Balance Sheet balances.
17 Table D-2.1a: Summary of Deposit Expansion Process Bank ΔTR ΔRR ΔER Δ ΔDD ΣΔDD B C D $1.00m $0.00m $1.00m $1.00m $1.00m $1.00m $1.00m $0.10m $0.90m $0.90m $0.90m $1.90m $0.90m $0.09m $0.81m $0.81m $0.81m $2.71m $0.81m $0.08m $0.73m $0.73m $0.73m $3.44m E Other Banks Totals
18 Figure D-2.7a: The Banking System s First Balance Sheet When r = 10% 1. Banking System TR = $50m RR = $50m ER = $0m GS = $140m = $335m DD = $500m NW = $25m NOTE: r = 10% and since ER = 0, the Banking System is fully loaned up (ER = 0 for all banks in the Banking System).
19 Figure D-2.7b: Banking System s Second Balance Sheet 2.a. Fed purchases $1m in GS from Bank b. Money Creation Step: Banking System creates a multiple number of s and DDs. (Note that the Banking System can do this because it does NOT lose the DDs it creates.) 2. a. b. TR = $51m RR = $50m ER = +$1m GS = $139m = $335m Δ = +$10m Banking System DD = $500m NW = $25m ΔDD = +$10m
20 Figure D-2.7c: Banking System s Third Balance Sheet 3. Banking System TR = $51m RR = $51m ER = 0 GS = $139m = $345m DD = $510m NW = $25m NOTE1: Banking System is fully loaned up and the Money Supply (DDs) has increased.
21 Figure D-2.8a: The Banking System s First Balance Sheet When r = 10% 1. Banking System TR = $50m RR = $50m ER = $0m GS = $140m = $335m DD = $500m NW = $25m NOTE: r = 10% and since ER = 0, the Banking System is fully loaned up (ER = 0 for all banks in the Banking System).
22 Figure D-2.8b: Banking System s Second Balance Sheet 2.a. Depositors convert $1m in DDs to C b. Money Destruction Step: Banking System destroys a multiple number of s and DDs. (s people use DDs to pay off their s banks do not renew loans.) 2. a. b. TR = RR = ER = GS = = Banking System DD = NW = Δ = ΔDD =
23 Figure D-2.8c: Banking System s Third Balance Sheet 3. Banking System TR = RR = ER = GS = = DD = NW = NOTE: Banking System is fully loaned up and the Money Supply (DDs) has decreased.
24 Complex Multiplier Formulas c = Currency Deposit Ratio = C/DD > 0 er = Excess Reserve Ratio = ER/DD > 0 MB = Monetary Base = TR + C mm* = Complex Multiplier mm* = (1 + c)/(r + er + c) M S = C + DD M S = C + DD M S = mm*(mb) M S = mm*( MB)
25 Figure E-1.1: Supply and Demand for Money M S 1/P P $1.00 $0.66 $0.50 $0.40 M D M
26 Figure E-1.2: Illustrating an Excess Demand for Money in the Money Market 1/P M S Money Market $0.50 $0.40 ED M 1 M 2 M D M NOTE: When the price level is P = 250 there is an ES in the goods markets and ED in the money market. The adjustment process in the goods markets drives prices down in all markets (deflation)instantaneously.
27 Figure E-1.3: Illustrating an Excess Supply of Money 1/P M S $0.66 ES Money Market $0.50 M 0 M 1 M M D NOTE: When the price level is P = 150 there is an ED in the goods markets and ES in the money market. The adjustment process in the goods markets drives prices up in all markets (inflation) instantaneously
28 Figure G-1.1: Illustrating the Inflationary Process When a Central Bank Overissues Money 1/P M S M S 0 1 1/P 0 ES Money Market 1/P 1 M D M 0 M 1 M NOTE: When the money supply increases from M S 0 to M S 1 the Central Bank has over issued money. But the only indication that it has that overissue has occurred is when the adjustment process has run its long and disruptive course with prices rising to P 1 (no instantaneous adjustment).
29 Figure G-1.2: Illustrating the djustment Process when Free Banks Overissue Money 1/P M S 0 M S 1 1/P 0 ES Money Market 1/P 1 M D M 0 M 1 M NOTE: When the price level is P 0 and free banks overissue money so that the money supply is now M S 1 there is an immediate reaction to reduce the money supply (because of adverse clearings) and all the adjustment occurs in the shortrun in the money market, not the goods market.
Chapter 11 The Central Bank Balance Sheet and the Money Supply Process
Chapter 11 The Central Bank Balance Sheet Problems and Solutions 1. In an effort to diversify, the Central Bank of China has decided to exchange some of its dollar reserves for euros. Follow the impact
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The government agency that oversees the banking system and is responsible for the conduct
More informationChapter 14. The Money Supply Process
Chapter 14. The Money Supply Process C H A P T E R O B J E C T I V E S By the end of this chapter, students should be able to: 1. Describe who determines the money supply. 2. Explain how the central bank
More informationLecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS. Peter N. Ireland Department of Economics Boston College. irelandp@bc.edu
Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 16: Determinants of the Money
More informationLecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS. Peter N. Ireland Department of Economics Boston College. irelandp@bc.edu
Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 17a: The Tools of Monetary
More informationchanges in spending changes in income/output AE = Aggregate Expenditures = C + I + G + Xn = AD
small larger changes in spending changes in income/output AE = Aggregate Expenditures = C + I + G + Xn = AD The Multiplier Effect A small change in spending gives rise to a larger change in income/output
More informationLecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS. Peter N. Ireland Department of Economics Boston College. irelandp@bc.edu
Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 15c: The Fed s Control of
More informationMishkin ch.14: The Money Supply Process
Mishkin ch.14: The Money Supply Process Objective: Show how the Fed controls stocks of money; focus on M1. - Macro theory simply assumes that the Fed can set M via open market operations. - Point here:
More informationWhat three main functions do they have? Reducing transaction costs, reducing financial risk, providing liquidity
Unit 4 Test Review KEY Savings, Investment and the Financial System 1. What is a financial intermediary? Explain how each of the following fulfills that role: Financial Intermediary: Transforms funds into
More informationhttp://angel.bfwpub.com/section/content/default.asp?wci=pgt...
Hmwk 14 1. Let's find out what counts as money. In this chapter, we used a typical definition of money: A widely accepted means of payment. Under this definition, which people are using money in the following
More informationCurrency: The paper money and coins owned by people and business firms
WHAT IS MONEY? Things acceptable as a means of payment 2 TYPES OF MONEY 1. COMMODITY MONIES: 2. FIAT MONIES (TOKEN MONIES): DECREED BY THE GOV T AS LEGAL TENDER. The gov t promises the public that will
More informationDiscussion of Government and Central Bank Balance Sheets, Inflation and Monetary Policy by Christopher A. Sims
Discussion of Government and Central Bank Balance Sheets, Inflation and Monetary Policy by Christopher A. Sims Timothy Cogley May 16, 2009 Questions about the Fed s Balance Sheet Does the vast expansion
More informationThe Banking System and the Money Supply. 2003 South-Western/Thomson Learning
The Banking System and the Money Supply 2003 South-Western/Thomson Learning What Counts as Money MONEY Anything that is widely accepted as a means of payment What Counts as Money MONEY Anything that is
More informationchapter: Solution Money, Banking, and the Federal Reserve System
Money, Banking, and the Federal Reserve System 1. For each of the following transactions, what is the initial effect (increase or decrease) on M1? or M2? a. You sell a few shares of stock and put the proceeds
More informationTHE MEANING OF MONEY. The Functions of Money. Money has three functions in the economy: The Functions of Money. The Functions of Money
In this chapter, look for the answers to these questions: What assets are considered money? What are the functions of money? The types of money? 11 What is the Federal Reserve? What role do banks play
More informationReference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapter 15. The Banking System and the Money Supply
Macroeconomics Topic 6: Explain how the Federal Reserve and the banking system create money (i.e., the supply of money) Explain the factors that affect the demand for money. Reference: Gregory Mankiw s
More informationMoney: Definition. Money: Functions. Money: Types 2/13/2014. ECON 3010 Intermediate Macroeconomics
Money: Definition ECON 3010 Intermediate Macroeconomics Chapter 4 The Monetary System: What It Is and How It Works Money is the stock of assets that can be readily used to make transactions. Money: Functions
More information2.If actual investment is greater than planned investment, inventories increase more than planned. TRUE.
Macro final exam study guide True/False questions - Solutions Case, Fair, Oster Chapter 8 Aggregate Expenditure and Equilibrium Output 1.Firms react to unplanned inventory investment by reducing output.
More informationchapter: Solution Money, Banking, and the Federal Reserve System
Money, Banking, and the Federal Reserve System 1. For each of the following transactions, what is the initial effect (increase or decrease) on M1? On M2? a. You sell a few shares of stock and put the proceeds
More informationMACROECONOMICS. The Monetary System: What It Is and How It Works. N. Gregory Mankiw. PowerPoint Slides by Ron Cronovich
4 : What It Is and How It Works MACROECONOMICS N. Gregory Mankiw Modified for EC 204 by Bob Murphy PowerPoint Slides by Ron Cronovich 2013 Worth Publishers, all rights reserved IN THIS CHAPTER, YOU WILL
More information3. a. If all money is held as currency, then the money supply is equal to the monetary base. The money supply will be $1,000.
Macroeconomics ECON 2204 Prof. Murphy Problem Set 2 Answers Chapter 4 #2, 3, 4, 5, 6, 7, and 9 (on pages 102-103) 2. a. When the Fed buys bonds, the dollars that it pays to the public for the bonds increase
More informationPRACTICE- Unit 6 AP Economics
PRACTICE- Unit 6 AP Economics Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The term liquid asset means: A. that the asset is used in a barter exchange.
More informationBUSINESS ECONOMICS CEC2 532-751 & 761
BUSINESS ECONOMICS CEC2 532-751 & 761 PRACTICE MACROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Study Questions 5 (Money) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The functions of money are 1) A) medium of exchange, unit of account,
More informationLecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS. Peter N. Ireland Department of Economics Boston College. irelandp@bc.edu
Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 15a: Introduction to the Money
More information4 Macroeconomics LESSON 4
4 Macroeconomics LESSN 4 The Federal Reserve System and Its Tools Introduction and Description The focus of this lesson is the Federal Reserve System: how its actions relate to the money creation process
More informationSolution. Solution. Money, Banking, and the Federal Reserve System. macroeconomics. economics
KrugmanMacro_SM_Ch13.qxp 10/27/05 3:20 PM Page 155 Money, Banking, and the Federal Reserve System 1. For each of the following transactions, what is the effect (increase or decrease) on M1? on M2? a. You
More informationMacroeconomics, Fall 2007 Exam 3, TTh classes, various versions
Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you
More information4. The minimum amount of owners' equity in a bank mandated by regulators is called a requirement. A) reserve B) margin C) liquidity D) capital
Chapter 4 - Sample Questions 1. Quantitative easing is most closely akin to: A) discount lending. B) open-market operations. C) fractional-reserve banking. D) capital requirements. 2. Money market mutual
More informationChapter 29: The Monetary System Principles of Economics, 7 th Edition N. Gregory Mankiw Page 1
Page 1 1. Introduction a. This is a fairly descriptive chapter, but it contains some important material for understanding the world that we live in. b. Money is important for facilitating trade. c. Paper
More informationProfessional Development. AP Macroeconomics. Monetary Policy. Curriculum Module
Professional Development AP Macroeconomics Monetary Policy Curriculum Module The College Board The College Board is a not-for-profit membership association whose mission is to connect students to college
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Survey of Macroeconomics, MBA 641 Fall 2006, Quiz 4 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The central bank for the United States
More informationEconomics 152 Solution to Sample Midterm 2
Economics 152 Solution to Sample Midterm 2 N. Das PART 1 (84 POINTS): Answer the following 28 multiple choice questions on the scan sheet. Each question is worth 3 points. 1. If Congress passes legislation
More informationChapter 13 Money and Banking
Chapter 13 Money and Banking Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. The most important function of money is (a) as a store of
More informationMacroeconomics, 8e (Parkin) Testbank 1
Macroeconomics, 8e (Parkin) Testbank 1 Chapter 9 Money, the Price Level, and Inflation 9.1 What is Money? 1) The functions of money are A) medium of exchange and the ability to buy goods and services.
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth
More information(a) Using an MPC of.5, the impact of $100 spent the government will be as follows: 1 100 100 2 50 150 3 25 175 4 12.5 187.5 5 6.25 193.
S5 Solutions 24 points Chapter 2: Fiscal policy. If the marginal propensity to save is.5, how large is the multiplier? If the marginal propensity to save doubles to., what happens to the multiplier? With
More information1 Multiple Choice - 50 Points
Econ 201 Final Winter 2008 SOLUTIONS 1 Multiple Choice - 50 Points (In this section each question is worth 1 point) 1. Suppose a waiter deposits his cash tips into his savings account. As a result of only
More informationECON 4110: Money, Banking and the Macroeconomy Midterm Exam 2
ECON 4110: Money, Banking and the Macroeconomy Midterm Exam 2 Name: SID: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following
More informationSome Answers. a) If Y is 1000, M is 100, and the growth rate of nominal money is 1%, what must i and P be?
Some Answers 1) Suppose that real money demand is represented by the equation (M/P) d = 0.25*Y. Use the quantity equation to calculate the income velocity of money. V = 4. 2) Assume that the demand for
More informationVisual One Grades 9-12 1 examples Of CurrenCy and COin
Visual One Examples of Currency and Coin 2 Tw o Ch e c k a n d Debit Card BIG BUCKS BANK NO. 338 PAY TO THE ORDER OF MEMO Uncle Sam One Thousand Dollars and no /00 $,000.00 Ima Citizen Big Bucks Bank 3
More informationChapter 1. Why Study Money, Banking, and Financial Markets?
Chapter 1 Why Study Money, Banking, and Financial Markets? Why Study Money, Banking, and Financial Markets To examine how financial markets such as bond, stock and foreign exchange markets work To examine
More informationMultifamily MBS Update: Yield Maintenance Using the Constant Maturity Treasury Rate
Multifamily Mortgage-Backed Securities Multifamily MBS Update: Yield Maintenance Using the Constant Maturity Treasury Rate Each Fannie Mae multifamily loan may have a voluntary prepayment protection provision.
More informationPractice Problems on Money and Monetary Policy
Practice Problems on Money and Monetary Policy 1- Define money. How does the economist s use of this term differ from its everyday meaning? Money is the economist s term for assets that can be used in
More informationChapter 17. Financial Management and Institutions
Chapter 17 Financial Management and Institutions 1 2 3 4 Identify the functions performed by a firm s financial managers. Describe the characteristics and functions of money. Identify the various measures
More information1. Firms react to unplanned inventory investment by increasing output.
Macro Exam 2 Self Test -- T/F questions Dr. McGahagan Fill in your answer (T/F) in the blank in front of the question. If false, provide a brief explanation of why it is false, and state what is true.
More informationHomework 5: The Monetary System and Inflation
Homework 5: The Monetary System and Inflation Solutions 1. Be sure to read your copy of the Wall Street Journal every weekday, looking especially for items related to the material in this course. Find
More informationWith lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy.
The Digital Economist Lecture 9 -- Economic Policy With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy. There is still great debate about
More informationMarkets, Investments, and Financial Management FIFTEENTH EDITION
INTRODUCTION TO FINANCE Markets, Investments, and Financial Management FIFTEENTH EDITION Ronald W. Melicher Professor of Finance University of Colorado at Boulder Edgar A. Norton Professor of Finance Illinois
More informationGLENCOE CORRELATION MATHEMATICS WITH BUSINESS APPLICATIONS NEW YORK Math & Financial Applications
GLENCOE CORRELATION MATHEMATICS WITH NEW YORK COURSE OUTLINE I. PAYROLL A. Terminology and Procedures SE: 92-107, 128-129, 427-428, 634-636, 788-791 B. Compensation Plans: Salary, Hourly, Piecework, Commission,
More informationFixed Exchange Rates and Exchange Market Intervention. Chapter 18
Fixed Exchange Rates and Exchange Market Intervention Chapter 18 1. Central bank intervention in the foreign exchange market 2. Stabilization under xed exchange rates 3. Exchange rate crises 4. Sterilized
More informationChapter 13 Money and Banking
Chapter 13 Money and Banking After reading Chapter 13, MONEY AND BANKING, you should be able to: Explain the three functions of money: Medium of Exchange, Unit of Account, Store of Value. Understand the
More informationChapter 12 Practice Problems
Chapter 12 Practice Problems 1. Bankers hold more liquid assets than most business firms. Why? The liabilities of business firms (money owed to others) is very rarely callable (meaning that it is required
More informationCompound Interest. Invest 500 that earns 10% interest each year for 3 years, where each interest payment is reinvested at the same rate:
Compound Interest Invest 500 that earns 10% interest each year for 3 years, where each interest payment is reinvested at the same rate: Table 1 Development of Nominal Payments and the Terminal Value, S.
More informationCHAPTER 6 ASSET-LIABILITY MANAGEMENT: DETERMINING AND MEASURING INTEREST RATES AND CONTROLLING INTEREST-SENSITIVE AND DURATION GAPS
CHAPTER 6 ASSET-LIABILITY MANAGEMENT: DETERMINING AND MEASURING INTEREST RATES AND CONTROLLING INTEREST-SENSITIVE AND DURATION GAPS Goals of This Chapter: The purpose of this chapter is to explore the
More informationEconomics 101 Multiple Choice Questions for Final Examination Miller
Economics 101 Multiple Choice Questions for Final Examination Miller PLEASE DO NOT WRITE ON THIS EXAMINATION FORM. 1. Which of the following statements is correct? a. Real GDP is the total market value
More informationKey learning points I
Key learning points I What do banks do? Banks provide three core banking services Deposit collection Payment arrangement Underwrite loans Banks may also offer financial services such as cash, asset, and
More informationQUIZ IV Version 1. March 24, 2004. 4:35 p.m. 5:40 p.m. BA 2-210
NAME: Student ID: College of Business Administration Department of Economics Principles of Macroeconomics O. Mikhail ECO 2013-0008 Spring 2004 QUIZ IV Version 1 This closed book QUIZ is worth 100 points.
More informationThe Economic Environment for Business
B. FINANCIAL MANAGEMENT ENVIRONMENT 1. The economic environment for business 2. The nature and role of financial markets and institutions The Economic Environment for Business What are the targets of macroeconomic
More informationDuration Gap Analysis
appendix 1 to chapter 9 Duration Gap Analysis An alternative method for measuring interest-rate risk, called duration gap analysis, examines the sensitivity of the market value of the financial institution
More informationPractice Problems Mods 25, 28, 29
Practice Problems Mods 25, 28, 29 Multiple Choice Identify the choice that best completes the statement or answers the question. Scenario 25-1 First National Bank First National Bank has $80 million in
More information380.760: Corporate Finance. Financial Decision Making
380.760: Corporate Finance Lecture 2: Time Value of Money and Net Present Value Gordon Bodnar, 2009 Professor Gordon Bodnar 2009 Financial Decision Making Finance decision making is about evaluating costs
More informationMemorandum: Regulation of Interest Rates on Time and Savings Accounts
Carnegie Mellon University Research Showcase @ CMU Tepper School of Business 3-1967 Memorandum: Regulation of Interest Rates on Time and Savings Accounts Allan H. Meltzer Carnegie Mellon University, am05@andrew.cmu.edu
More informationPrepared by: Product Description for Bulgarian Indexed Capped Credit. R. Marisol Ravicz The Urban Institute. H. Beth Marcus Fannie Mae
-1k1 (I, (14(0 Product Description for Bulgarian Indexed Capped Credit Prepared by: R. Marisol Ravicz The Urban Institute H. Beth Marcus Fannie Mae The Urban Institute 2100 M Street NW Washington, DC 20037
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The Fed uses three policy tools to manipulate the money supply:, which affect reserves
More informationECON 4423: INTERNATIONAL FINANCE
University of Colorado at Boulder Department of Economics ECON 4423: INTERNATIONAL FINANCE Final Examination Fall 2005 Name: Answer Key Student ID: Instructions: This test is 1 1/2 hours in length. You
More informationEssential Question Essential Question Essential Question Essential Question Essential Question Essential Question Essential Question
What is the difference between an arithmetic and a geometric sequence? Essential Question Essential Question Essential Question Essential Question Essential Question Essential Question Essential Question
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) When a new depositor opens a checking account at the First National Bank, the bank's
More informationLecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS. Peter N. Ireland Department of Economics Boston College. irelandp@bc.edu
Lecture Notes on MONEY, BANKING, AND FINANCIAL MARKETS Peter N. Ireland Department of Economics Boston College irelandp@bc.edu http://www2.bc.edu/~irelandp/ec261.html Chapter 9: Banking and the Management
More informationUniversity of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi
University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 24 Money Price Inflation 1) Money is A) currency plus coins. B) the same as gold.
More informationModule 4 Glossary. Board of Governors of the Fed. Business Cycle. Contraction in the business cycle Contractionary Fiscal Policy
Module 4 Glossary Term Board of Governors of the Fed Business Cycle Consumers Contraction in the business cycle Contractionary Fiscal Policy Contractionary monetary policy Deficit Discount Rate Entrepreneurism
More informationSolution. Solution. Monetary Policy. macroeconomics. economics
KrugmanMacro_SM_Ch14.qxp 10/27/05 3:25 PM Page 165 Monetary Policy 1. Go to the FOMC page of the Federal Reserve Board s website (http://www. federalreserve.gov/fomc/) to find the statement issued after
More information8. Eurodollars: Parallel Settlement
8. Eurodollars: Parallel Settlement Eurodollars are dollar balances held by banks or bank branches outside the country, which banks hold no reserves at the Fed and consequently have no direct access to
More informationMoney Supply. Key point: if banks hold 100% reserves (i.e., make no loans), they do not change the money supply. 1. Who affects the money supply?
Money Supply 1. Who affects the money supply? 2. 100% reserve banking 3. Fractional reserve banking 4. Money Supply determination and the money multiplier 5. What causes money supply to change? 6. Instruments
More informationDescribe the functions of the Federal Reserve System (the Fed).
The Monetary System Chapter CHAPTER CHECKLIST Define money and describe its functions. Money is any commodity or token that is generally accepted as a means of payment. Money serves as a medium of exchange,
More informationEcon 202 Final Exam. Table 3-1 Labor Hours Needed to Make 1 Pound of: Meat Potatoes Farmer 8 2 Rancher 4 5
Econ 202 Final Exam 1. If inflation expectations rise, the short-run Phillips curve shifts a. right, so that at any inflation rate unemployment is higher. b. left, so that at any inflation rate unemployment
More information$496. 80. Example If you can earn 6% interest, what lump sum must be deposited now so that its value will be $3500 after 9 months?
Simple Interest, Compound Interest, and Effective Yield Simple Interest The formula that gives the amount of simple interest (also known as add-on interest) owed on a Principal P (also known as present
More informationECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME:
ECON 201: Introduction to Macroeconomics Final Exam December 13, 2012 NAME: Circle your TA s name: Amy Thiago Samir Circle your section time: 9 a.m. 3 p.m. INSTRUCTIONS: 1) The exam lasts 2 hours. 2) The
More informationConcept 5. Inflation What is inflation? Inflation means prices are rising and the purchasing power of the dollar is declining.
Concept 5. Inflation What is inflation? Inflation means prices are rising and the purchasing power of the dollar is declining. What is inflation rate? The inflation rate is the percentage increase in prices
More informationPaper F9. Financial Management. Friday 7 June 2013. Fundamentals Level Skills Module. The Association of Chartered Certified Accountants.
Fundamentals Level Skills Module Financial Management Friday 7 June 2013 Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FOUR questions are compulsory and MUST be attempted. Formulae
More informationa. If the risk premium for a given customer is 2.5 percent, what is the simple promised interest return on the loan?
Selected Questions and Exercises Chapter 11 2. Differentiate between a secured and an unsecured loan. Who bears most of the risk in a fixed-rate loan? Why would bankers prefer to charge floating rates,
More informationAPPENDIX 3 TIME VALUE OF MONEY. Time Lines and Notation. The Intuitive Basis for Present Value
1 2 TIME VALUE OF MONEY APPENDIX 3 The simplest tools in finance are often the most powerful. Present value is a concept that is intuitively appealing, simple to compute, and has a wide range of applications.
More informationMONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL*
Chapter 11 MONEY, INTEREST, REAL GDP, AND THE PRICE LEVEL* The Demand for Topic: Influences on Holding 1) The quantity of money that people choose to hold depends on which of the following? I. The price
More informationPracticed Questions. Chapter 20
Practiced Questions Chapter 20 1. The model of aggregate demand and aggregate supply a. is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution
More informationMacroeconomics, 10e, Global Edition (Parkin) Chapter 25 Money, the Price Level, and Inflation. 1 What is Money?
Macroeconomics, 10e, Global Edition (Parkin) Chapter 25 Money, the Price Level, and Inflation 1 What is Money? 1) The functions of money are A) medium of exchange and the ability to buy goods and services.
More informationThe Federal Reserve System. The Structure of the Fed. The Fed s Goals and Targets. Economics 202 Principles Of Macroeconomics
Economics 202 Principles Of Macroeconomics Professor Yamin Ahmad The Federal Reserve System The Federal Reserve System, or the Fed, is the central bank of the United States. Supplemental Notes to Monetary
More informationUnique Living s guide to purchasing a luxury property in Cyprus
Unique Living s guide to purchasing a luxury property in Cyprus Choice of Property We strongly recommend that the buyer select a property first, but should not pay any money until a meeting with a lawyer
More informationUsing an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on :
Using an appropriately labeled money market graph, show the effects of an open market purchase of government securities by the FED on : The money supply Interest rates Nominal Interest rates i1 i2 Sm1
More informationLearning Objectives. Learning Objectives. Learning Objectives. Principles Used in this Chapter. Simple Interest. Principle 2:
Learning Objectives Chapter 5 The Time Value of Money Explain the mechanics of compounding, which is how money grows over a time when it is invested. Be able to move money through time using time value
More informationRatios from the Statement of Financial Position
For The Year Ended 31 March 2007 Ratios from the Statement of Financial Position Profitability Ratios Return on Sales Ratio (%) This is the difference between what a business takes in and what it spends
More informationVISUAL 1 TERMS OF MODERN FINANCIAL MARKETS
VISUAL 1 TERMS OF MODERN FINANCIAL MARKETS Instruments Asset-backed security Credit default swap Bond Common stock Mortgage-backed security Mutual fund Option Futures contract Subprime mortgage Institutions
More informationSlovak Republic. From: OECD Banking Statistics: Methodological Country Notes 2010
From: OECD Banking Statistics: Methodological Country Notes 2010 Access the complete publication at: http://dx.doi.org/10.1787/9789264089907-en Slovak Republic Please cite this chapter as: OECD (2011),
More informationVerðtryggð Lán. Dr. Jacky Mallett jacky@iiim.is
Verðtryggð Lán Dr. Jacky Mallett jacky@iiim.is Mortgage Lending Rates in 2012 Iceland 9%+ 4% + Inflation rate on principal, 25-40 years Structured as negative amortization loans United States ~4.5% Fixed
More informationUnderstanding Central Banking in Light of the Credit Turmoil
Understanding Central Banking in Light of the Credit Turmoil Marvin Goodfriend Tepper School Carnegie Mellon University Implementing Monetary Policy Post-Crisis: What Have We Learned? What Do We Need to
More informationVOCABULARY INVESTING Student Worksheet
Vocabulary Worksheet Page 1 Name Period VOCABULARY INVESTING Student Worksheet PRIMARY VOCABULARY 1. Savings: 2. Investments: 3. Investing: 4. Risk: 5. Return: 6. Liquidity: 7. Stocks: 8. Bonds: 9. Mutual
More informationECO209 MACROECONOMIC THEORY. Chapter 18
Prof. Gustavo Indart Department of Economics University of Toronto ECO209 MACROECONOMIC THEORY Chapter 18 THE MONEY SUPPLY AND MONETARY POLICY Discussion Questions: 1. Open market operations are the main
More informationExam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.
Exam 1 Review 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high
More informationFinance Unit 8. Success Criteria. 1 U n i t 8 11U Date: Name: Tentative TEST date
1 U n i t 8 11U Date: Name: Finance Unit 8 Tentative TEST date Big idea/learning Goals In this unit you will study the applications of linear and exponential relations within financing. You will understand
More information