Business, 18.06.2021 07:40 sophiamoser

Answer each of the following separate parts. You are required to draw a graph or a diagram for each part. (a) Suppose you deposit some money into bank A. The required reserve ratio is 10%.
Draw a diagram to illustrate how this initial deposit would increase the money supply for the entire economy. The diagram should illustrate at least 3 rounds of deposits. (You should not draw a table.)

(b) The Federal Reserve wants to decrease money supply by conducting an open market operation. Draw a diagram to illustrate the open market operation. Your diagram should also show that interbank loans decrease.

(c) Consider the data of country C. Suppose an event happened and the price level and real GDP changed as shown in the following table. Draw an AD-AS graph to show what happened to SRAS, LRAS and AD in short run and then long run.

Before the event Short run after the event Long run after the event
Real GDP (USD) 3.5 trillion 4.0 trillion 3.5 trillion
Price level 100 80 100

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Answer each of the following separate parts. You are required to draw a graph or a diagram for each...

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