Suppose you land your first job with Columbia Records in New York City and, after your first week at work, you deposit $100 in your checking account at Chase Manhattan Bank. If the reserve requirement is 10 percent, show how your $100 deposit can create money. Illustrate the process by filling in the missing data for the cells through 5 stages in the following table.
Answer to relevant QuestionsSuppose the Federal Reserve raised the reserve requirement to 50 percent. Show how that would affect the value of money creation through the first 5 stages of deposit and loan in practice problem 1. One way the Fed can increase the nation's money supply is by reducing the reserve requirement. Explain how this works. To illustrate, you can construct your own bank transactions and changes in the assets and liabilities of ...Keynesian economists were fine-tuning the econ omy during the 1960s but found their policies ineffectual in the 1970s. Why? Explain why unemployment insurance is a good example of an automatic stabilizer. Is the level of government spending too high? How has it grown? How does it compare to government spending in other industrial economies?
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