Answer:
The correct answer is the option C: changes in M in the short run can cause Real GDP to fall.
Explanation:
To begin with, the monetarist economists are the one that support the idea of not having any intervention from the government regarding the economy and moreover they are the ones whose ideology focus mainly in the money, as it name indicates. Therefore that when the government decides in the short run to increase the amount of the money supply then the monetarists argue that the action done by them will cause the Real GDP to fall because of the high inflation that it will cause the increase of the money supply and consequently low demand, etc.
Answer:
I used an excel spreadsheet since there is not enough room here.
Explanation:
Answer:
If the reserve requirement is 20 percent, then excess reserves of $800 can increase M1 money supply by ___.
$3,200.
Explanation:
a) Data and Calculations:
Excess reserves = $800
Reserve requirement = 20%
Therefore, M1 money supply = $800/20% = $4,000
The increase in the M1 money supply will be $3,200 ($4,000 - $800)
b) The amount of funds that a bank is required by the central bank to hold in reserve to meet liabilities in case of sudden withdrawals by depositors is called the reserve requirement. It is usually stated as a percentage by the Fed Reserve. The Fed uses reserve requirement as a tool to increase or decrease money supply in the economy and influence interest rates. What the Fed does with the reserve requirement, therefore, depends on the monetary policy that it chooses to respond to the money market.
Answer: Income statement $100,000
Balance sheet warranty liability $Nill
Explanation:
Since we are at the end of the period and all activities has been concluded with no expectation of claim of repairs. The firm will only record the cost incurred for current period on repairs which is $100,00 ( $100*1000) . The liability will be zero since the company has taken care of all repairs for the period.
