Please answer all of this! 1.D. The Fed reduces the reserve requirement to zero.Monetary Base:Money Multiplier:Money Supply:Interest Rates:Bond Prices:1.E. The Fed intervenes in the foreign exchange market selling $1,000 dollars and buying euros.Monetary Base:Money Multiplier:Money Supply:Interest RatesBond Prices:1.F. Explain the Taylor rule (be sure to provide the equation and tell what the central bank will do). If thecentral bank of a country has a policy of inflation targeting, what does this imply about the Taylor rule? Dothe Fed and European Central Bank follow the Taylor rule? Explain your answers.1.G. Suppose a country is at potential GDP and the government decides to balance the fiscal budget byreducing government spending. Illustrate and explain the effects on GDP, interest rates, and prices using anIS-LM graph and an AD-SAS graph.1.H. Suppose the Fed responds to the effort to balance the budget in IG by following the Taylor rule. Whatwould the Fed do? Explain why. Explain what would happen to GDP, interest rates, and prices. Illustrate onboth an IS-LM and an AD-SAS graph, comparing the equilibrium in 1G to the new equilibrium after theFed acts (either use new graphs or carefully label the ones used in part 1G so that it is clear which curvesare shifting and what the effects are on GDP, interest rates, and prices). Part 1:1. Suppose the monetary base is $80,000, the reserve requirement is 0.20, the currency-deposit ratio is .20,and excess reserves ratio is 0.20. In each case below, explain what would happen to: (i) the monetarybase, (ii) the money multiplier, (iii) the money supply, (iv) interest rates, and (v) bond prices.Explain why each would or would not change (a few words will suffice). Give numerical answers whereyou have enough information. For each answer, compare the change to the initial conditions. (Nographs are required.)1A. Calculate the initial money multiplier and money supply:Money Multiplier_Money Supply1.B. The Fed sells $2,000 in bonds in open market operations.Monetary Base:Money Multiplier:Money Supply:Interest Rates:Bond Prices:1.C. The Treasury sells $2,000 in bonds to finance a government stimulus package.Monetary Base:Money Multiplier:Money Supply:Interest Rates:Bond Prices:

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Part 1: 1. Suppose the monetary base is $80,000, the reserve requirement is 0.20, the currency-deposit ratio is .20, and excess reserves ratio is 0.20. In each case below, explain what would happen to: (i) the monetary base, (ii) the money multiplier, (iii) the money supply, (iv) interest rates, and (v) bond prices. Explain why each would or would not change (a few words will suffice). Give numerical answers where you have enough information. For each answer, compare the change to the initial conditions. (No graphs are required.) 1A. Calculate the initial money multiplier and money supply: Money Multiplier_ Money Supply

Part 1: 1. Suppose the monetary base is $80,000, the reserve requirement is 0.20, the currency-deposit ratio is .20, and excess reserves ratio is 0.20. In each case below, explain what would happen to: (i) the monetary base, (ii) the money multiplier, (iii) the money supply, (iv) interest rates, and (v) bond prices. Explain why each would or would not change (a few words will suffice). Give numerical answers where you have enough information. For each answer, compare the change to the initial conditions. (No graphs are required.) 1A. Calculate the initial money multiplier and money supply: Money Multiplier_ Money Supply

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter13: Monetary Policy

Section: Chapter Questions

Problem 8E

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