Chapter 12:




Assignments for Macroeconomics Chapter 12




Assignment #1:
Prove that money is created when banks issue loans. Go through daily operations of banks and confirm your proof.


Assignment #2:
Explain why the monetary multiplier takes place. Give formula. Comment about its size.


Assignment #3:
Show the key role of bank’s excess reserves for money creation. Conclude with an indication on how to control money supply.


Assignment #4:
Explain open market operations. Show why this is the most popular tool for control of money supply. List minor tools.


Assignment #5:
List and explain the various shortcomings of monetary policy. Conclude with the policy dilemma. (Use historical examples).





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