The table below shows the effect of changes in various economic variables in the countries of Beckland and Heineken. 00000000000 Beckland | Heineken | For every $18 million change Interest rates change by 3 Interest rates change by 3 in money supply percentage point. percentage points. Investment spending and net Investment spending and net For every 1 percentage point exports change by a total of exports change by a total of $5 change in interest rates $20 million. millicn. For every $18 million change Aggregate demand changes by Aggregate demand changes by in expenditures $38 million. %38 million. The price index changes by 1.5 The price index changes by 2 For every $18 million change point and real GDP changes by $4 | points and real GDP changes by in aggregate demand million. $4 million. What is the effect of an increase of $10 million in money supply on the price level and the level of real GDP in each country? Beckland price change: |Increases v |by points. Beckland GDP change: | Increases v by $ millions. Heineken price change: |Increases v | by points. Round your price to 1 decimal place. Heineken GDP change: | Increases v by $ millions. 2 Use the graph below to answer the following questions. a. Which graph below depicts the Keynesian view of the money market? Which is the monetarist view? A 12 10 Interest rate o a 50 100 150 200 250 300 Quantity of money \f2 Keynesian view:|(Click to select) v (Click to select Monetarist view: Graph A Graph B b. Which graph below depicts the Keynesian view of investment demand? Which is the monetarist view? A 12 10 8 Interest rate 6 4 2 0 40 80 120160200240280320360400440480 Investment spending\fIntere 0 40 80120160200240280320360400440480 Investment spending Keynesian view:i (Click to select) v | Monetarist view: | Graph A Graph B c. According to the Keynesians, how much would investment spending change if the money supply were to increase by $507 (Click to select) v | by $ d. According to the monetarists, how much would investment spending change if money supply were to increase by $50? (Click to select) v | by $ c. According to the Keynesians, how much would investment spending change if the money supply were to increase by $50? | (Click to select) v [ {Increase ne monetarists, how much would investment spending change if money supply were to increase by $50? Decrease (Click to select) v | by $ The central bank of Muldovia has issued $95.000 in Muldovian dollars. What is the size of the money supply in each case below? Round your answers below to the nearest whole number. a. If Muldovians have deposited none of the currency in Muldovia's banks then the size of the money supply is $ b. If Muldovians have deposited all of the currency in Muldovia's banks and the banks have a 100% target reserve ratio then the size of the money supply is $ c. If Muldovians have deposited 55% of the currency in Muldovia's banks and the banks have a 100% target reserve ratio then the size of the money supply 1s $ d. If Muldovians have deposited 55% of the currency in Muldovia's banks and the banks have a 7% target reserve ratio and are fully loaned up then the size of the money supply is $ . 4 Table A below shows abbreviated balance sheets for the central bank in the country of Beckland and B shows tables for its whole commercial banking system. The target reserve ratio for the banks is 10 percent. (All figures are in billions of dollars.) a. Suppose that the Bank of Beckland buys $1 billion of government securities (T-bills) from the commercial banks. Show the immediate effects of this transaction on the balance sheets in column (1) of Tables A and B. A) Central Bank of Beckland Assets (1) Liabilities (1) Treasury bills $210 $ Notes in circulation $205 $ Short-term loans to banks 15 Government deposits 8 Deposits of banks 12 B) Beckland's Banking System Assets (1) (2) Liabilities (1 ) (2) Reserves : Deposits 200 in vaults 8 in Bank of Beckland 12 Securities 40 Short-term loans from Bank of Beckland 15 Loans to customers 160 Equity 5 b. What effect does this transaction have on the money supply of Beckland? Money supply|(Click to select) Click to select c. What effect do increases have on the banking system's excess reserves? decreases Banks become does not change by $ billion.4 Assets (1) Liabilities (1) Treasury bills $210 Notes in circulation $205 $ Short-term loans to banks 15 Government deposits 8 Deposits of banks 12 B) Beckland's Banking System Assets (1) (2) Liabilities (1 ) (2) Reserves : Deposits 200 in vaults 8 in Bank of Beckland 12 Securities 40 Short-term loans from Bank of Beckland 15 Loans to customers 160 Equity 5 b. What effect does this transaction have on the money supply of Beckland? Money supply |(Click to select) c. What effect does the transaction have on the banking system's excess reserves? Banks become (Click to select) v by $ | billion. (Click to select) d. If the banks wer under reserved show the result in column (2) of the banking system's balance sheet. over reserved To answer this question, complete the column (2) in the above table. Round your answers to the nearest whole number. e. By how much has money supply now changed? Round your answers to the nearest whole number. Change in money supply +/- of $ billion.b. What effect does this transaction have on the money supply of Beckland? Money supply |(Click to select) |. c. What effect does the transaction have on the banking system's excess reserves? Banks become { (Click to select) v [by $ billion. d. If the banks were to fully loan-up, show the result in column (2) of the banking system's balance sheet. To answer this question, complete the column (2) in the above table. Round your answers to the nearest whole number. e. By how much has money supply now changed? Round your answers to the nearest whole number. Change in maney supply +/- of $ billion. 5 Answer the questions below from the data in table (all figures are in billions of dollars). Total currency issued by the Bank of Canada $26 Total personal savings deposits 196 Total demand deposits 280 Deposits of government at the Bank of Canada 50 Currency held by commercial banks 5 Canada Savings Bonds and non-money market mutual funds 295 Government bonds owned by the public 105 Deposits at near-banks(certificates of deposit 50 a. Total currency in circulation is $ billion. b. How much larger is M1 than the total currency in circulation? M1 is larger than total currency by $[ billion. c. How much larger is M2 than M1? M2 is larger than M1 by $[ billion. d. How much larger is M2+ than M2? M2+ is larger than M2 by $[ billion. e. How much larger is M2++ than M2+? M2++ is larger than M2+ by $ _ billion.Rearrange the items in the balance sheet shown in the table below so that each is in the correct position. Change one figure only to reflect the bank achieving a 5% target reserve ratio. [ Reess [ [ e [ Assets Liabilities (Click to select) ~ | $ (Click to select) ~ $ (Click to select) ~ Reserves Loans Shareholders' equity Demand deposits Total Securities Fixed assets 6 Rearrange the items in the balance sheet shown in the table below so that each is in the correct position. Change one figure only to reflect the bank achieving a 5% target reserve ratio. Assets Liabilities Reserves $ 70 Demand deposits $700 Loans 980 Securities 260 Shareholders' equity 90 Fixed assets 180 Assets Liabilities (Click to select) $ (Click to select v $ (Click to select) (Click to select (Click to select) Reserves Loans (Click to select) Shareholders' equity Total Demand deposits Securities Fixed assetsRearrange the items in the balance sheet shown in the table below so that each is in the correct position. Change one figure only to reflect the bank achieving a 5% target reserve ratio. [ Liabilities ] Reserves Loans Shareholders' equity | %0 | Fixedassets | 180 | Assets Liabilities (Click to select % (Click to select) ~ % (Click to select (Click to select) v (Click to select (Click to select Total Total SP