Explain the difference between the Money Market and the Capital Market
Suppose that the U.S and Japan are two Ricardian economies
July 9, 2020After reading Bethel’s A Leader has High Ethics: Building Trust with your Followers,†do you believe that ethics can be legislated or litigated
July 9, 2020Explain the difference between the Money Market and the Capital Market
1. Explain the difference between the Money Market and the Capital Market. In terms of the short-run functioning of the economy, which is more important? In terms of the long-run growth of the economy, which is more important? Explain.
2. What is the Reserve Ratio and how is it related to total money creation? If the Reserve Ratio is 10%, and a bank receives $10,000 in new deposits, what it the maximum amount of money that can be created? Why might a bank choose to hold a higher reserve ratio? If they do hold a higher ratio, would the actual amount created be more than or less than the amount you calculated above?
3. Does a nation’s Central Bank have precise control over the money supply? Why or why not?
4. Define Open Market Operations (OMO). If the U.S. Federal Reserve wanted to increase the money supply, what kind of OMO would it pursue? If the U.S. Federal Reserve wanted to decrease the money supply, what kind of OMO would it pursue?
