(a) Outline any FIVE (5) factors that determine the money multiplier. (10 marks) (b) Bank Negara...

 

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(a) Outline any FIVE (5) factors that determine the money multiplier. (10 marks) (b) Bank Negara Malaysia (BNM) has decided to sell RM10 million worth of Japanese government bonds to CIMB Bank Malaysia. Illustrate the impact of this transaction using T- accounts of BNM and CIMB Bank. (8 marks) (c) In Keynesian liquidity preference theory, there are three motives behind the demand for money, which are transaction motive, precautionary motive and speculative motive. Explain the nature of demand for money in the precautionary motive. (a) Outline any FIVE (5) factors that determine the money multiplier. (10 marks) (b) Bank Negara Malaysia (BNM) has decided to sell RM10 million worth of Japanese government bonds to CIMB Bank Malaysia. Illustrate the impact of this transaction using T- accounts of BNM and CIMB Bank. (8 marks) (c) In Keynesian liquidity preference theory, there are three motives behind the demand for money, which are transaction motive, precautionary motive and speculative motive. Explain the nature of demand for money in the precautionary motive.

Answer rating: 100% (QA)

a Factors that determine the money multiplier 1 Required reserve ratio The money multiplier is inver... View the full answer