1) Suppose the required reserve ratio is 0.1, what is the money multiplier? .....

2) Depict in the AD-AS model, an exonomy exhibiting a short run equilibrium with a postive output gap....

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demand pull inflation

cost pull inflation

2. (15 points) Suppose the required reserve ratio is .1, what is the money multiplier? Suppose I find a $100 bill in a chest in the ocean and deposit it at ABC bank, which was "loaned up". How much can the bank loan out? Ignoring other entries, show separately in the bank's balance sheet each of the following steps: accepting the deposit, issuing a loan, and clearing of a check for the amount of the loan. How much will checkable deposits in the entire banking system increase? 3. (15 points) Depict in the AD-AS model, an economy exhibiting a short run equilibrium with a positive output gap resulting from an increase in AD caused by increased investment spending. i. What is true about the level of unemployment in this circumstance? ii. What is true about the utilization of capital in this circumstance? iii. What are the implications of your statements in parts i. and ii. for long run adjustments in resource prices? iv. How will these changes in resource prices impact the economy in the long run? Depict this change in your graph