Econ 241 Fall 2023 Homework Assignment # 2 Name: Due: October 31, 2023 1) (5 points)...
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Econ 241 Fall 2023 Homework Assignment # 2 Name: Due: October 31, 2023 1) (5 points) Explain how a government budget deficit might crowd out private investment. Use a diagram to show it. Money, Interest, Inflation CHAPTER C ted your he able to money and rate Investment demand amount of investment, the real wth, human capital growifi, the growth rate of real 2) (3 points) At the beginning of the year, United Delivery had trucks valued at $1.3 million. During the year, United Delivery purchased new trucks valued at $500,000. If the value of the trucks at the end of the year was $1.5 million, what is the amount of its net investment and its depreciation during the year? 3) (4 points) Explain how each of the following events would affect the supply of loanable funds curve: a. The economy is in a recession so people's disposable income is lower. b. The stock market is booming so people's wealth is higher. c. The future looks a bit grim so expected future income is lower. d. The real interest rate increases. 2 Real interest rate (percent per year) 10 8 6 4 2 0 2 3 4 SLF DLF 5 6 Loanable funds (trillions of 2009 dollars) 4) (3 points) Using the figure above, show the effect on the real interest rate and the quantity of loanable funds of an increase in expected profit. 5) (3 points) If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have? Show your calculations. Infla nleted yo be able for money ar money with hnological cha 6) (3 points) The First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves? Show your calculations. 7) (4 points) List the Fed's main policy tools (at least three) and briefly explain each one. Econ 241 Fall 2023 Homework Assignment # 2 Name: Due: October 31, 2023 1) (5 points) Explain how a government budget deficit might crowd out private investment. Use a diagram to show it. Money, Interest, Inflation CHAPTER C ted your he able to money and rate Investment demand amount of investment, the real wth, human capital growifi, the growth rate of real 2) (3 points) At the beginning of the year, United Delivery had trucks valued at $1.3 million. During the year, United Delivery purchased new trucks valued at $500,000. If the value of the trucks at the end of the year was $1.5 million, what is the amount of its net investment and its depreciation during the year? 3) (4 points) Explain how each of the following events would affect the supply of loanable funds curve: a. The economy is in a recession so people's disposable income is lower. b. The stock market is booming so people's wealth is higher. c. The future looks a bit grim so expected future income is lower. d. The real interest rate increases. 2 Real interest rate (percent per year) 10 8 6 4 2 0 2 3 4 SLF DLF 5 6 Loanable funds (trillions of 2009 dollars) 4) (3 points) Using the figure above, show the effect on the real interest rate and the quantity of loanable funds of an increase in expected profit. 5) (3 points) If you have assets that include $50 in cash, a checking account with $135, a savings account with $500, and a jar of coins for laundry of $15.75, how much M1 do you have? Show your calculations. Infla nleted yo be able for money ar money with hnological cha 6) (3 points) The First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves? Show your calculations. 7) (4 points) List the Fed's main policy tools (at least three) and briefly explain each one.
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