Directions

Complete the following questions from the assigned reading. Wording from each of the questions is provided below. When submitting your assignment, add headers to separate each problem. Submit only one document with your response. For questions regarding how you will be assessed, please view the Calculation Assignment Rubric, located in the Rubric Directory under Course Resources.

Evaluate the impact of monetary policy on economic outcomes Problem 40 (page 372 in text book)

All other things being equal, by how much will nominal GDP expand if the central bank increases the money supply by $100 billion, and the velocity of money is 3? Show your calculations to support your answer.

Describe how central banks execute monetary policy Problem 38 (page 372 in text book)

Suppose the Fed conducts an open market purchase by buying $10 million in Treasury bonds from Acme Bank. Sketch out the balance sheet changes that will occur as Acme converts the bond sale proceeds to new loans. The initial Acme bank balance sheet contains the following information:

Assets
Reserves	30
Bonds	50
Loans	50
Liabilities
Deposits	300
Equity
Owners Equity	30