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Busn602 Week 2 Homework Problems:

  • Date Submitted: 06/29/2016 06:47 AM
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BUSN602   Week 2 Homework Problems:
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You will complete your homework in Microsoft Excel, in the template provided in the assignment. Your work must be organized and properly formatted. Short essay answers must include references.
• Chapter 5: DQ5-1, E5-2; P5-2, P5-6
• Chapter 7: DQ7-17; E7-3, E7-4, P7-5
• Identify and define five economic indicators.
Name your assignment file as “LastnameFirstinitial-BUSN602-Week2", and submit by midnight ET, Day 7.

List and describe briefly the economic policy objectives of the nation.
Important policy objectives of the federal government include economic growth, high employment, price stability, and a balance in international transactions. The achievement of these objectives is the responsibility of monetary policy, fiscal policy, and debt management carried out by the Federal Reserve System, the President, the Congress, and the U.S. Treasury. Describe the responsibilities of the various policy makers in trying to achieve the four economic policy objectives.
Assume that Bank A receives a primary deposit of $100,000 and that it must keep reserves of 10 percent against deposits.
a. Prepare a simple balance sheet of assets and liabilities for the bank immediately after the deposit is received.
b. Assume Bank A makes a loan in the amount that can be “safely lent.” Show what the bank’s balance sheet of assets and liabilities would look like immediately after the loan.
c. Assume that a check in the amount of the “derivative deposit” created in Part b was written and sent to another bank. Show what Bank A’s (the lending bank’s) balance sheet of assets and liabilities would look like after the check is written.
Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10 percent and there are no leakages in the system.
a. What is the size of the money multiplier?
b. What will be the system’s money...


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