Hello, I need to answer to this question please, from a until k!!! Greatly appreciate, thanks!!!

PART A: QUESTION 1 From the money multiplier model of the broadly- defined money supply (M2), which is defined as: MS2 = MB * (1+ CD + T) (RD + I'm.t + ent + en + CD) WHERE; As defined earlier, MS, is the broadly defined money supply, Co is the currency deposit ratio that lies between 0 and 1 . T which is the term deposit . Ro the desired cash reserve ratio ert idle excess reserve held for term deposits en idle excess reserve ratio for deposit between 0 and 1. rit desired cash revenue for term deposits. Therefore, with this definitions of the components of the broadly defined money supply, we can find the relevant equations to express some of the components of the broad money supply function. a. The equilibrium level of demand deposits (D): A demand deposit is an account with a bank or other financial institution that allows the depositor to withdraw his or her funds from the account without warning or with less than seven days' notice. However, to derive the equilibrium level of demand deposit, it stems from: the total bank demand for cash reserve (BCRr) which is equal to the addition of the cash reserve held against term deposit (RRd), cash reserve held against term deposit (RRT), idle excess reserve held against term deposit (ERD), and the excess reserve held against term deposits (ERT). i.e. RD =C +BCRT = RRd + RR, + ERa + ER This can further be broken down to get D(RD + Int + ert + ed + CD) as initially defined above. To solve for equilibrium, We equate the Supply of cash reserve (which is also the monetary base); Rs = MB = RD to get; RD = MB = D (RD + Int + ert + en + CD) Therefore, D' = MB * 1 (RD + ['it + ert + ed + CD) This study source was downloaded by 100000783486959 from CourseHero.com on 03-14-2024 07:56:29 GMT -05:00 https://www.coursehero.com/file/22938201/Econ-432-take-home-mterm/ b. Term Deposit (T) A term deposit is a deposit held at a financial institution that has a fixed term. These are generally short-term with maturities ranging anywhere from a month to a few years The term deposit denoted as T, and this is further equal to the term deposit ratio defining the proportion of D held as term deposit (t) and the demand deposit (D) i.e. T = t * D. One of the difference between the demand deposit and the term deposit is that the term deposit is interest bearing.c. Total bank deposits When calculating the Total Deposits from a bank's perspective, various kinds of deposits are taken into consideration. These are added together to determine the Total Deposits. Demands Deposits, Term Deposits, and Interest and Non- Interest bearing deposits are the cumulative examples of deposit items that are summed to get the value of Total Deposits. Total bank deposits = D + T And from previous definitions of D and T, TBD =MB * 1 t* MB * 1 (RD + rit + ert + ed + CD) Ro+ I'mt + ert + ed + CD) TBD = MB (1+ t) * 1 (RD + I'mt + ert + en + CD) d. The equilibrium values of MB Monetary base is the total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank's reserves. The monetary base can be broken down into the broad MS and the narrow MS. i.e. MB = MB, + MBb where; MBn = Co+ 1 + t (RD + I'mt + ert + ed + CD) and MBb = (R-b) (CD + 1 + t) (RD + [it + ert + ed + CD) This study source was downloaded by 100000783486959 from CourseHero.com on 03-14-2024 07:56:29 GMT -05:00 https://www.coursehero.com/file/22938201/Econ-432-take-home-mterm/ e. The narrowly defined money supply (M1) M1 is a metric for the money supply of a country and includes physical money - both paper and coin - as well as checking accounts, demand deposits and negotiable order of withdrawal (NOW) accounts. i.e. M1 = CD+ 1 (MB) (RD + rit + ert + en + CD)f. The broadly defined money supply (M2) broad money is a measure of the money supply that includes more than just physical money such as currency and coins. It generally includes demand deposits at commercial banks, and any monies held in easily accessible accounts. Therefore, M2= Cp+ 1+ t (MB) (RD + rit + ert + en + CD) Where components of all variables are defined above. g. The amount of total bank reserves (BCRT) The cash and coin a bank keeps in its vault and all of its deposits with a Federal Reserve bank. Total reserves are the assets that a bank has immediately available to cover its liabilities. Total reserves count against the bank's reserve requirements. the total bank demand for cash reserve (BCRT) which is equal to the addition of the cash reserve held against term deposit (RRd), cash reserve held against term deposit (RRT), idle excess reserve held against term deposit (ERD), and the excess reserve held against term deposits (ERT). i.e. BCRT = RRa + RR, + ERd + ER This can further be broken down to get D(Ro + I'mt + ert + en + CD) as initially defined above. h. The currency holdings of the non-bank public (C) This can be defined as the currency deposit ratio that lies (between 0 and 1) and the demand deposit. i.e. C = CD * D explicitly, C = CD . (MB * 1 (RD + I'mt + ert + en + CD) i. The amount of Bank loans . an amount of money loaned at interest by a bank to a borrower, usually on collateral security, for a certain period of time. Therefore, BL = (D+ T) - BCRT Recall, D = MB' 1 (RD + rit + ert + en + CD) This study source was downloaded by 100000783486959 from CourseHero.com on 03-14-2024 07:56:29 GMT -05:00 https://www.coursehero.com/file/22938201/Econ-432-take-home-mterm/ T = MB * t (RD + I'mt + ert + ed + CD) BCRT = D(RD + Int + ert + en + CD) j. Narrow money multiplier (mm1) The money multiplier (also called the credit multiplier or the deposit multiplier) is a measure of the extent to which the creation of money in the banking system causes the growth in the money supply to exceed growth in the monetary base. MM1 = 1+ Cp (RD + rit + ert + en + CD) k. Broad money multiplier (mm2) The broad money multiplier includes term deposit ratio defining the proportion of D held as term deposit (t) unlike the narrow money multiplier (mm 1) Mm2 = 1 + CD RD + rit + ert + en + CD)In finding the concept of the IS/LG and LM curve, there is need for some basic definitions. The IS simply means investment savings. The IS curve describes the relationship between real interest rates and aggregate output when the demand for goods and services is in equilibrium. For each given level of real interest rate, the IS curve tells us the level of aggregate output that is necessary for the goods market to be in equilibrium. As the real interest rate rises, planned investment spending and net export fall, which in turn lowers aggregate demand; aggregate output must be lower if it is to equal aggregate demand and satisfy goods market equilibrium. Therefore, the IS curve is downward sloping. The GT curve shows the relationship between government purchases and taxes. The government affects aggregate demand in two ways; through its purchases and through taxes as disposable income is equal to income minus taxes and disposable income affects consumption expenditure. Higher taxes therefore, would reduce disposable income for a given level of income and wound cause consumption expenditure to fall. The LM curve which means Liquidity preference Money Supply The intuition behind the positive slope of LM is such that an increase in the interest rate reduces the demand for money and an increase in income increases it. The LM curve tells you all combinations of Y and r that equilibrate the money market, given the economy's nominal money supply M and price level P. That is, the LM curve is the set of all Y and r combinations that satisfy the money market equilibrium condition, real money demand must equal the given real money supply: Ma(Y,r) =M/P This study source was downloaded by 100000783486959 from CourseHero.com on 03-14-2024 07:56:29 GMT -05:00 https://www.coursehero.com/file/22938201/Econ-432-1ake-home-mterm/ Notice the real money supply on the right hand side is fixed when drawing the LM; any change in the real money supply shifts the entire curve. Assuming real money demand depends positively on the amount of real transacting Y and negatively on the opportunity cost of holding money r, the LM is an upward sloping curve, with steepness depending on how sensitive real money demand is to changesinr. (Note: remember to put the definitions of all variables in the above, also its not yet complete)