Suppose that in December the public wants to hold more currency to buy gifts andmake donations to local charities and so withdraws cash from their bank accounts.(i) Draw a diagram illustrating how the shift from deposits into currency affectsthe equilibrium in the market for reserves.(ii) What happens to the overnight interest rate? Your answer should include abrief explanation (i.e., a few sentences).

Suppose that in December the public wants to hold more currency to buy gifts andmake donations to local charities and so withdraws cash from their bank accounts.(i) Draw a diagram illustrating how the shift from deposits into currency affectsthe equilibrium in the market for reserves.(ii) What happens to the overnight interest rate? Your answer should include abrief explanation (i.e., a few sentences).

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter15: Monetary Theory And Policy

Section: Chapter Questions

Problem 1.1P

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Suppose that in December the public wants to hold more currency to buy gifts andmake donations to local charities and so withdraws cash from their bank accounts.(i) Draw a diagram illustrating how the shift from deposits into currency affectsthe equilibrium in the market for reserves.(ii) What happens to the overnight interest rate? Your answer should include abrief explanation (i.e., a few sentences).
Explain how pursuing an overnight interest rate target by the Bank of Canada could cause the quantity of nonborrowed reserves to fluctuate. Draw a diagram for the market for reserves (settlement balances) to support your explanation.
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Asap... Suppose you found $10 000 while digging in your backyard and you deposited it in the bank. How would your new demand deposit account create a situation of excess reserves at your bank?
All other factors held constant what would be the effect All other factors held constant, what would be the effect on the demand for money (M1) of each of the following situations. Explain the rationale behind your responses.1. An increase in real GDP2. An increase in general price levels3. A rise in the interest rate on savings accounts and Treasury securities.4. A doubling of all prices, wages, and incomes. All other factors held constant what would be the effect
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Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? can anyone explain please why it will change
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