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Discussions-Read the scenario below, and then answer questions 1 and 2. Refer to this week’s readings in the text, if needed.Scenario: Bank A has an increase in deposits (or excess reserves) of $100

Discussions-Read the scenario below, and then answer questions 1 and 2. Refer to this week’s readings in the text, if needed.Scenario: Bank A has an increase in deposits (or excess reserves) of $100M and the reserve requirement is 10% with other banks not holding reserves beyond the requirement.How much money can Bank A create by making loans?How much money can the banking system as a whole create? (Show calculation).-After reading the Week Five required readings, address these questions in your post What are the current monetary policy goals? How has the Fed attempted to meet some of these goals? What have been the outcomes?Do you agree or disagree with the Fed taking action to intervene when the economy is not well-functioning? Why or why not?

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**************** *** ******** ***** *** then answer ********* * *** 2 Refer to this week’s ******** ** the **** ** *************** **** * *** ** increase in ******** *** ****** ********* ** ***** *** *** ******* *********** is *** **** ***** ***** not ******* reserves ****** the ************** **** ***** can Bank * ****** ** ****** ********* **** money can *** ******* ****** ** * ***** create? ***** ************** **** **** **** * ** ******* **** * of ****** ******** ** * result of *** ******** ** ******** ** **** **** to **** *** * ** ******** [=10% ** **** *** ********* *** M *** be ****** ******** Bank * *** create ** ********** $90 * ***** ** making loans ** *** **** amountThe new loan ** *** * **** ** **** * **** *** ** ********* ** some ***** bank ********* *** **** **** **** hold 10% of **** ****** and **** *** *** ********* amount which will **** ** ********* ** ******* **** ******* *** *** ******* **** ** **** *** **** bank receiving the ******* **** *** **** *** ****** ******** to **** outThe ***** multiplier ** ***** ***** r is the reserve ratioHere m = ************ *** ******* ***** ******* leads ** *** ******** ** additional ***** ****** ********* ** $1000 * [=100*10]-After ******* *** **** **** ******** ******** ******* ***** ********* ** your ******** *** the ******* ******** ****** goals?How *** *** Fed ********* ** meet some ** ***** ****** **** **** been the *********** *** ***** ** ******** **** *** *** ****** action ** intervene **** *** economy is *** well-functioning? *** ** why not?The current ******** ****** **** ** ****** ************ rate ** its ******* rate of **** **** *** current high rate ** ************ The *** *** **** **** interest ***** *** ** ********* ****** ****** ** **** ** will ** **** stimulate investments *** **** ****** ****** ** the ******* *** come ** * ********** *** this *** ******** in further ******* cascading ****** ** *** ********** of the economy ** is ***** ******** **** *** ***** recession has ******** ** ** ******** ** ********** ************ ***** *** **** ******** *** natural **** ** ************ *** *** ****** ******** ****** ********** ************ and ** the scenario ******** **** *** ****** *** **** *** ******** in ******* rate of ************ ** ****** ** ** ********* The *** *** ******* ** discontinue its ************ ****** ******* ** ****** quarters *** Fed *** used quantitative ****** to **** *** *** Funds target **** ***** ** **** so **** *** **** **** ** interest ** ******** A negative **** ******** rate implies **** ***** *** paying the Fed ** hold *** ******** Fed has kept *** ******** ***** *** to ********* ****** ****** and *************** ** *** ***** *** has **** ** **** ** *** monetary ****** are **** Deposit Facility ******** ** ******** *** Fed *** **** initiated ******** ******* ********** like Commercial ***** ******* ******** **** Asset Backed ********** **** ******** Primary ****** ****** ******** **** Securities ******* ******** Fed has ******* ************ these ** **** Fed *** **** ********** **** ******* Facilities ** **** *** ********* *********** ** banksThe ******* ** these ******* have **** **** ** has staved off * phase of depression **** *** Great Depression ** ******** **** ****** the economy ** ***** ******* ***** **** of growth the ****** ************ ** *** *** *** ***** *** ********* ****** **** collapsing ********** *** ******* in ** *** ***** ****** **** the ***** ***** ********* would **** ******* ***** ****** ** ***** assets *** unemployment is ***** ****** **** ******* ****** and ** ** quite possible **** the ******* **** ** ************ *** moved ******* *** to the **** ** growth in the **** few ****** agree **** the actions ***** ** the *** ** is ********** ****** to undertake ******** ****** stimulus **** ** ****** ****** ***** *** latter requires ************* ******** ** ****** by ****** events *** ********* ** the ******** ** holding back ****** policy ******** ** **** * ********* ******** policy ** *** only ***** ** ******* *** ******* **** ***** into ******* recession I think ******** ****** ** more effective **** ****** ****** ******* there ** no ******** involved in the ******

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