Central Banks and Conduction of Monetary Policy Compare the similarities and differences in term of the structure
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Central Banks and Conduction of Monetary Policy
- Compare the similarities and differences in term of the structure and independence of the European System of Central Banks (ESCB) and the Federal Reserve System. (10 marks)
- What are the main problems with having a central bank that is not independent of the rest of the government? (4 marks)
- The trading desk at the Federal Reserve sold $100,000,000 in T-bills to the public. If the current reserve requirement is 8.0%, how much could the money supply change? (4 marks)
- Consider a bank policy to maintain 24% of deposits as reserves. The bank currently has $20 million in deposits and holds $800,000 in excess reserves. What is the required reserve on a new deposit of $100,000?
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