Question
Please help me out!:( REQUIRED: Answer parts a to f. a. Explain the distinction between a central bank and a commercial bank. (6 marks) b.
Please help me out!:(
REQUIRED:
Answer parts a to f.
a. Explain the distinction between a central bank and a commercial bank. (6 marks)
b. Describe the transactions that the Bank of England can undertake to increase the quantity of money. (10 marks)
c. Describe the BoE's assets and liabilities. What is the monetary base, and does it relate to the BoE's balance sheet? (10 marks)
d. What would the BoE do to implement quantitative easing, how would the monetary base change, and how would bank reserves change? (8 marks)
e. Explain how the money market will be affected if too much money is printed by the central bank. (6 marks)
f. In Australia, if the central bank increases the money supply by $150 billion, how much extra money will be generated in the economy given the currency drain ratio is 33 percent of deposits, and the reserve ratio is 8 percent of deposits. (10 marks)
(Total 50 marks)
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