Mrs. Josina Alexander is a University Lecturer who in 2019 earned income of J$550,000 per month. She used J$250,000 to purchase groceries for her family, pay her rent, utility bills, gardener, household helper and her monthly repairs/maintenance of her car

In addition, she used J$200,000 to make monthly hire-purchase payments on the washer, dryer and 65" Smart TV she purchased from Singer Corp. in 2017.

Every month she lodged J$100,000 to her account at the Building Society, J$50,000 to her savings account and the balance is used to 'top-up' her pension fund monthly contribution.

At the end of each month she carefully completed in writing a statement of her revenues and expenses as well as a statement of her adjusted net worth.

a)Use each of the functions of money to illustrate how Josina spends her monthly income.

b)Based on the current economic situation, as a macroeconomic student, explain to Mrs. Alexander the different motives for holding currency.

c)NCB has received an additional $150,000 in deposits at the end of June and Josina borrows $135,000 to make a purchase. Calculate the money multiplier and the total impact that these deposits will have on the overall money supply.

d)If the required reserve ratio increased to 20%,

calculate

i)the amount of loanable funds,

ii)the money multiplier; and

iii)the impact on the overall money supply.

e)Explain three tools of monetary policy that can be used to alleviate the challenges currently facing Jamaica as a result of Covid-19.

f)Explain the classical economists' belief that contractionary monetary policy would affect the price level in the economy.

g)The discount rate has been reduced to 5% from 10%. Is this a contractionary or an expansionary measure? Explain your answer.