Finance

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1. Determine the size of the M1 money supply using the following information. Currency plus traveler’s checks $25 million Negotiable CDs $10 million Demand deposits $13 million Other checkable deposits $12 million 4. Following are components of the M1 money supply at the end of last year. Document Preview: 1. Determine the size of the M1 money supply using the following information. Currency plus traveler’s checks $25 million Negotiable CDs $10 million Demand deposits $13 million Other checkable deposits $12 million 4. Following are components of the M1 money supply at the end of last year. What will be the size of the M1 money supply at the end of next year if currency grows by 10 percent, demand deposits grow by 5 percent, other checkable deposits grow by 8 percent, and the amount of traveler’s checks stays the same? Currency $700 billion Demand deposits $300 billion Other checkable deposits $300 billion Traveler’s checks $10 billion 8. Assume that a country estimates its M1 money supply at $20 million. A broader measure of the money supply, M2, is $50 million. The country’s gross domestic product is $100 million. Production or real output for the country is 500,000 units or products. a. Determine the velocity of money based on the M1 money supply. b. Determine the velocity of money based on the M2 money c. Determine the average price for the real output. 11. The One Product economy, which produces and sells only personal computers (PCs), expects that it can sell 500 more, or 12,500 PCs, next year. Nominal GDP was $20 million this year, and the money supply was $7 million. The central bank for the One Product economy plans to increase the money supply by 10 percent next year. a. What was the average selling price for the personal computers this year? b. What is the expected average selling price next year for personal computers if the velocity of money remains at this year’s turnover rate? What percentage change in price level is expected to occur? c. If the objective is to keep the price level the same next year (i.e., no inflation), what percentage increase in the money supply should the central bank plan for? d. How would your answer in (c) change if the velocity of money is expected to be three times next year? What is it now? c. If total assets were $11... Attachments: FIN-350-assig....xlsx FIN-Assignmen....xlsx Jan 29 2013 12:59 AM

 

Solution ID:609061 | This paper was updated on 26-Nov-2015

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