a. Explain the impact of the following events on the money market equilibrium and equilibrium interest rates: i. Decrease in the minimum reserve requirement ratio. ii. Central Bank buys government bonds in an open market operation iii. Invention of credit cards. b. Define and explain "the money multiplier" in your own words. If the money multiplier = 2.2 and the central bank increases the monatery base by 10 million TL, what will be the total increase in the quantity of money in the economy? c. Define and explain "the quantity theory of money" in your own words.
a. Explain the impact of the following events on the money market equilibrium and equilibrium interest rates: i. Decrease in the minimum reserve requirement ratio. ii. Central Bank buys government bonds in an open market operation iii. Invention of credit cards. b. Define and explain "the money multiplier" in your own words. If the money multiplier = 2.2 and the central bank increases the monatery base by 10 million TL, what will be the total increase in the quantity of money in the economy? c. Define and explain "the quantity theory of money" in your own words.
Chapter25: Money Creation
Section: Chapter Questions
Problem 8SQP
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a. Explain the impact of the following events on the money market equilibrium and
equilibrium interest rates:
i. Decrease in the minimum reserve requirement ratio.
ii. Central Bank buys government bonds in an open market operation
iii. Invention of credit cards.
b. Define and explain "the money multiplier" in your own words. If the money
multiplier = 2.2 and the central bank increases the monatery base by 10 million
TL, what will be the total increase in the quantity of money in the economy?
c. Define and explain “the quantity theory of money" in your own words.
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