Question
a. Suppose a bank has $100 in banking capital, $1000 of deposits, 10% required reserves, 10% in excess reserves, and the rest in loans. Draw
a. Suppose a bank has $100 in banking capital, $1000 of deposits, 10% required reserves, 10% in excess reserves, and the rest in loans. Draw the T-account for this bank.
b. Nobel Prize winner Ed Prescott has said "economic fluctuations are optimal responses to uncertainty in the rate of technological change;" or more simply put - recessions are optimal. What is an argument for this?
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Macroeconomics Principles Applications and Tools
Authors: Arthur O'Sullivan, Steven Sheffrin, Stephen Perez
9th edition
978-0134089027, 134089022, 978-0134420684
