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Assumethatthereserverequirementsare25%andbanksholdnoexcessreserves.(6 points) a.AssumethatKimdeposits$100ofcashfromherpocketintohercheckingaccount. Calculateeachofthefollowing. i.Themaximumdollaramountthecommercialbankcaninitiallylend ii.Themaximumtotalchangeindemanddepositsinthebankingsystem iii.Themaximumchangeinthemoneysupply b.AssumethattheFederalReservebuys$5millioningovernmentbondsontheopen market.Asaresultoftheopenmarketpurchase,calculatethemaximumincreaseinthe moneysupplyinthebankingsystem. c.Giventheincreaseinthemoneysupplyinpart(b),whathappenstorealwagesin theshortrun?Explain

Assumethatthereserverequirementsare25%andbanksholdnoexcessreserves.(6 points) a.AssumethatKimdeposits$100ofcashfromherpocketintohercheckingaccount. Calculateeachofthefollowing. i.Themaximumdollaramountthecommercialbankcaninitiallylend ii.Themaximumtotalchangeindemanddepositsinthebankingsystem iii.Themaximumchangeinthemoneysupply b.AssumethattheFederalReservebuys$5millioningovernmentbondsontheopen market.Asaresultoftheopenmarketpurchase,calculatethemaximumincreaseinthe moneysupplyinthebankingsystem. c.Giventheincreaseinthemoneysupplyinpart(b),whathappenstorealwagesin theshortrun?Explain

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