Answer:
Please find the detailed answer below.
Explanation:
PART 1:.
a. Deposit = money supply - currency held
$6,000,000 - $2,000,000
= $4,000,000
b. Bank reserve is reserve-deposit ratio x deposit
0.25 x $4,000,000
=$1,000,000
c. Monetary base = currency held + bank reserve
$2,000,000 + $1,000,000
=$3,000,000
d. Money multiplier= money supply/monetary base
$6,000,000/$3,000,000
=2
PART 2.
a. Bank reserve
$4,000,000 + $1,000,000
=$5,000,000
b. Money supply= currency held + bank deposit
Currency held= base - reserve
$10,000,000 - $5,000,000
= $5,000,000
Therefore money supply is
$5,000,000 + $20,000,000
=$25,000,000
c. Money multiplier= money supply/monetary base
$25,000,000/$10,000,000
=2.5
An increase in aggregate demand when the economy is below potential output increases real output and has little or no effect on price levels.
The Keynesian aggregate supply curve shows that the AS curve is fairly flat. This means that during economic downturns, firms supply the quantity of goods demanded at a particular price level.
The Keynesian zone is on the left side of his SRAS curve and is fairly flat, so movements in aggregate demand affect production but have little effect on price levels.
The Keynesian model suggests that in the short term less flexible wages and prices will push the aggregate supply curve upward. This model makes it more likely that the economy will fall below the full employment level. This means companies can hire new workers and increase production without raising wages or prices.
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Answer:
B. Predatory pricing and buying out competitors
Answer:
Commercial bank
Explanation:
A commercial bank accepts cash deposits from the general public and lends a portion of the money as loans to make profits. Commercial banks make profits by charging a high-interest rate on credit issued than the interest rate they offer on deposits. By accepting deposits and lending to other customers, commercial banks act as intermediaries between suppliers and users of credit.
Commercials are profit-making institutions. Although their primary function revolves around accepting deposits and issuing out loans, they also perform other duties such as;
- Discounting bills of exchange
- Overdraft facility
- Agency functions, including payment functions and insurance of letters of credit and checks.
- General utility services including foreign exchange transactions, underwriting securities, and safe deposits.
Answer:
Long-term investments.
Explanation:
Capital budgeting can be regarded as process that is been utilized by business in determining the type proposed fixed asset purchases that need to be declined or should be accepted. This process helps in creating quantitative view as regards the proposed fixed asset investment, so that rational basis to make make a judgment can be surfaced. It should be noted that Capital budgeting is the process of analyzing Long-term investments.
