Assignment I A hard copy of the assignment is due when you come to take the exam

Question

Assignment I A hard copy of the assignment is due when you come to take the exam. No assignments will be accepted after you start the exam. The assignment will be graded for correctness with each blank equaling 1 point. Due on the day of Exam 1 1. Recently people have become more concerned with saving for retirement. This will cause the supply of funds available willt borrowers. (Your choices are increase “l", decrease “D”, or not change “NC") (4 pts) Recently people have decreased the amount of spending due to a poor job market. This will cause the supply of funds available to e toand the demand of funds available to This the interest rate paid to savers and the interest rate paid to 2. and the demand of funds available to This will the interest rate paid to savers and the interest rate paid to borrowers. (Your choices are increase "", decrease "D", or not change "NC") (4 pts) 3. The Fed buys $800 of bonds from Bank A. Bank A is now able to make a loan to Jim for (#). Jim deposits _-_-(#) at Bank B. Bank B is now able to make a loan to lose for loan to Tyler for_-_-(#). Ultimately, the initial increase in the money supply of (#) at Bank C. Bank C is now able to make a -(#) will lead to a total of (#1 after this process is complete. (Assume a reserve requirement of 10% and money multiplier of 10x.) (7) Assume there is a margin requirement of 40% and you want to purchase stock totaling $1,000. You will put in-___ (8) of your money and borrow (#). If your stock at the end of the year is worth $1,200, you have earned a return of you did not purchase stock on the margin, you would have earned a return of (96). (Percentage return-investment profit / amount invested) (4) The Federal Reserve is currently worried about to discourage growth. To do this, the Fed will money supply andi The Federal Reserve is currently worried about to encourage growth. To do this, the Fed will money supply andinterest rates which should result inspending, (5) 4. (%). If 5. and as a result wants bonds in order to the interest rates which should result inspending. ( 6. and as a result wants bonds in order to the

Explanation / Answer

1. I, D, D, I

2. D, I, I, D

3. 800, 800, 800*0.9 = 720, 720, 720*0.9 = 648, 800, 800*10 = 8000

4. 400, 600, 200/400 = 50%, 200/1000 = 20%

5. Inflation, sell, reduce, increase, lower

6. Disinflation, buy, increase, reduce, higher

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