(Solved by Humans)-Econ 201 Class Assignment 20 Review Questions 1. If the required

Paper Details

please complete the assignment. thank you in advance!

Econ 201
Class Assignment 20
Review Questions
1. If the required reserve ratio is 10%, find:
a. Required reserves if deposits are $200,000.
b. Excess reserves if total reserves are $50,000.

2. If the Fed buys bonds, what effect will this have on the money supply?

3. The price index increases from 180 to 192. Find the inflation rate.

4. ______________________________________ economists believe that prices tend to be sticky.
5. If households increase their savings, what do we expect to happen to equilibrium interest rates and investment spending in the economy?

New Questions
6. The money supply is $6 million. The price level is 1.5 and real GDP is $80 million. Find the velocity of
money.
7. If the velocity of money increases, what happens to total spending in the economy, ceteris paribus?
8. If the money supply in #7 increases to $7,500,000, the velocity increases to 25, and the price level does
not change, what will happen to real GDP?
9. Is the scenario above more consistent with Keynesian or classical economics?

10. The Fed uses monetary policy to return the economy to full employment. Complete the tables and the
graphs:

Appropriate Monetary Policy
Buy or Sell Bonds?
Raise or Lower the Reserve Requirement?
Raise or Lower the Discount Rate?
Raise or Lower Interest Payments on Reserves?
11. Draw what will happen on the money market below if the Fed tries to increase the money supply and
classical economists are correct about flexible prices.



Solution details: