Unit 8 Assignment Template: Money, Banking, and the Federal Reserve System

Name: ______________

BU204 Section Number: ______

Date: ______________

General Instructions for all Assignments

1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format:

Course number_section number_Last name_First name_Unit number.

Example: BU204_Section02_David_Alex_Unit1

2. At the top of the template, insert: Your Name, Course Number and Section (BU204 Section 0x), and the Date.

3. Insert your answers below each question or in the appropriate space provided for in the question. Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

4. Your answers should

a. follow current APA format with citations to your sources,

b. include a list of references at the bottom of your last page,

c. be in Standard English with correct spelling, punctuation, grammar, and style,

d. be double-spaced,

e. be formatted in Times New Roman,12-point, black font, and

f. respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.

5. Upload the completed assignment to the appropriate unit Dropbox.

6. Direct any questions about the assignment to your course instructor.

Assignment

This assignment addresses how banks create money through making loans and how the change in the money supply is calculated, as well as how to calculate the money multiplier. In addition, this assignment examines the tools the Federal Reserve System uses to influence the money supply.

1. In the hypothetical country of Westlandia, banks are required to hold 20% of checkable deposits as reserves. The public holds 50% of the loans as currency in circulation and redeposits the remaining 50% percent of the loans.

a. Complete the table (calculations should be to no more than two decimal places).

Round	Deposits	Required Reserves of 20%	Excess Reserves	New Loans	50% of loan proceeds are held as currency in circulation by people	Loan proceeds redeposited
1	$500	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
2	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
3	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
4	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
5	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
6	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
7	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
8	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
9	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
10	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
Totals	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)

b. Calculate the new money supply.

(Enter your response here.)

c. Calculate the money multiplier.

(Enter your response here.)

2. In the hypothetical country of Middlelandia, banks are required to hold 20% of checkable deposits as reserves. Also, the public holds none of the loans as currency in circulation and redeposits all the loans.

a. Complete the table (calculations should be to no more than two decimal places).

Round	Deposits	Required Reserves of 20%	Excess Reserves	New Loans	None of loan proceeds are held as currency in circulation by people	Loan proceeds redeposited
1	$500	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
2	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
3	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
4	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
5	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
6	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
7	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
8	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
9	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
10	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
Totals	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)

b. Calculate the new money supply.

(Enter your response here.)

c. Calculate the money multiplier.

(Enter your response here.)

3. In the hypothetical country of Eastlandia, banks are required to hold 10% of checkable deposits as reserves. Also, the public holds none of the loans as currency in circulation and redeposits all the loans.

a. Complete the table (calculations should be to no more than two decimal places).

Round	Deposits	Required Reserves of 10%	Excess Reserves	New Loans	None of loan proceeds are held as currency in circulation by people	Loan proceeds redeposited
1	$500	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
2	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
3	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
4	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
5	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
6	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
7	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
8	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
9	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
10	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)
Totals	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)	(Enter your response here.)

b. Calculate the new money supply.

(Enter your response here.)

c. Calculate the money multiplier.

(Enter your response here.)

4. Describe in detail the differences between the three hypothetical countries' money supplies, money multipliers, and likely impacts on each economy.

(Enter your response here.)

5. Explain how each of the following situations changes the quantity of money (money supply) in the economy, based on its computed change in money supply.

a. The Federal Reserve System buys bonds.

(Enter your response here.)

b. The Federal Reserve System auctions credit.

(Enter your response here.)

c. The Federal Reserve System raises the discount rate.

(Enter your response here.)

d. The Federal Reserve System raises the reserve requirement.

(Enter your response here.)

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References:

Author. (Date.) Title. Source.

Directions for Submitting Your Assignment

Before you submit your assignment, you should save your work on your computer and use the correct filename that is specified in item 1 of the General Instructions for all assignments. When you are ready, submit to the Unit 8 Assignment Dropbox.