Economics Question

2007-11-16 7:13 am

Describe the effects of the following factors on menetary base, money multiplier and money supply:

a) an increase in the reserve-deposit ratio,

b) an open-market purchase,

c) an increase in discount window borrowing,

d) an increase in the discount rate.

回答 (1)

用戶22404

2007-11-16 10:27 pm

✔ 最佳答案

a) Monetary base and money supply will be lowered as more reserves will be kept in the banking system. The money multiplier will become smaller.
b)Monetary base and money supply will become larger as central banks purchased bonds and injected money into the market. However, as no change in reserve ratio hence no change in money multiplier.
c) As more banks borrowed money from central bank, monetary base and money suppl will increase. The multiplier remains the same.
d)It will discourage banks to borrow money from central bank, hence reduceing monetary base and money supply. Multilpier remains the same.

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