ECN-601 Module 7 Chapter 13 and 14 Problems

Economics – Inflation and Monetary Policy                                         

Grand Canyon University  

Text book: Economics for Managers (3rd Edition)        

Complete the following:                                              

1. Chapter 13, Technical Questions 1, 3, and 5 in the textbook.                                   

2. Chapter 13, Application Question 1 in the textbook.                                   

3. Chapter 14, Application Question 1 in the textbook.                                   

Chapter 13                                         

Technical Question 1                                     

Explain which of the following are counted as part of the money supply (M1):                                   

a. Checking Account Deposits                                    

b. Stocks                                             

c. Savings accounts deposits                                      

d. Government bonds                                  

Technical Question 3                                     

If the reserve requirement (rr) is 0.2, what is the simple deposit multiplier?                                        

If, in addition, the currency deposit ratio (c) is 0.05 and the excess reserve ratio (e) is 0.15, what is the money multiplier?                                                

Explain why the money multiplier differs from the simple deposit multiplier…………………………….