Mathematics, 15.10.2021 01:00, karlacr5117
cr+1 B. M M Problem 4. (10 points) Consider an economy whose money supply M is determined by the households' cash-deposit ratio cr, banks' reserve-deposit ratio it, and the monetary base B: M cr + rr Moreover, the price level P in this economy is determined by the equilibrium condition for the real money balances: P - L(i, Y), where L is the demand for real money balances as a function of the interest rate i and the real output Y. Assume further that Y L6,Y) = Vi i=r + ET, r= 2, E = 2, Y =Y, cr = 0.1, rr = 0.1. where En is the expected inflation rate in percentages. - (a) Suppose that the central bank wants the annual) inflation rate over the next year to be 2 percent. How much should the central bank let the monetary base B grow over this period relative to the current level? (b) Suppose that the stock market crashes and the banks in this economy become extremely cautious. As a result, they raise their reserve-deposit ratio to rr = 0.2. The central bank still wants the inflation rate over the next year to be 2 percent. How much should the central bank let the monetary base B grow over this period relative to the current level? (c) In addition to the banks' change in the reserve-deposit ratio to rr = 0.2, households also respond by raising their cash-deposit ratio to cr = 0.2 and adjusting their expected inflation to En = 1 percent. The central bank still wants the inflation rate over the next year to be 2 percent. How much should the central bank let the monetary base B grow over this period relative to the current level?
Answers: 3
Mathematics, 21.06.2019 21:30, elicollierec
What does independent variable and dependent variable mean in math?
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Mathematics, 21.06.2019 21:30, unknowntay04
Which equation shows the variable terms isolated on one side and the constant terms isolated on the other side for the equation -1/2x+3=4-1/4x? a. -1/4x=1 b. -3/4x=1 c. 7=1/4x d. 7=3/4x
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cr+1 B. M M Problem 4. (10 points) Consider an economy whose money supply M is determined by the hou...
Mathematics, 16.09.2020 16:01
Mathematics, 16.09.2020 16:01
Mathematics, 16.09.2020 16:01
Mathematics, 16.09.2020 16:01
Mathematics, 16.09.2020 16:01
Mathematics, 16.09.2020 16:01
Mathematics, 16.09.2020 16:01
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Mathematics, 16.09.2020 17:01
Mathematics, 16.09.2020 17:01