曼昆经济学原理英文版文案加习题答案29章

1、曼昆经济学原理英文版文案加习题答案2章THEMONETARYSYSTEMWHATSNEWINTHESEVENTHEDITION:ThereQiSDaonewDinDtheDNewsobxwhy皿Gold?|LEARNING口OBJECTIVES：BDotheoendoofothiSDChapterDDStudentSDShouidDunderstand：whatomoneyDisoandowhatofunctionsomoneyohasDinDtheoeconomy.whatotheDFederalDReserveoSDStemoiSQhowotheobankingosystemoheipso

2、determineotheosuppiyoofomoney.whatotooisotheoFederaioReserveousesotooaiterotheosuppiyoofomoney.CONTEXTDANDDPURPOSE：chapteroi6oisotheofirstochapteroinoaotwo-chapterosequenceodeaiingowithomoneyoandopricesoinotheoiongorun.odescribesowhatomoneyoisoandodeveiopsohowotheoFederaioReserveocontroisotheoquanti

3、tyoofomoney.DBecauseotheomoneyoinfiuencesotheorateoofoinfiationoinotheoiongorun,otheofoiiowingchapteroconcentratesoonotheocausesoandocostsoofoinfiation.Theopurposeoofochapteroi6oisotooheipostudentsodeveiopoanounderstandingoofowhatomoneyois,owhatoformsomoneybankingosystemoheipsocreateomoney,oandohowo

4、theoFederaioReserveocontroisotheoquantityoofomoney.DAnounderstmoneyoisoimportantobecauseotheoquantityoofomoneyoaffectsoinfiationoandointerestoratesoinotheoiongorun,oanempioymentoinotheoshortorun.KEYDPOINTS：oTheotermomoneyorefersotooassetsothatopeopieoreguiariyouseotoobuyogoodsoandoservices.oMoneyose

5、rvesothreeofunctions.oAsoaomediumoofoexchange,oitoisotheoitemousedotoomakeotransactions.DAsaounitoofoaccount,oitoprovidesotheowayoinowhichopricesoandootheroeconomicovaiuesoareorecorded.DAsoastoreoofovaiue,oitooffersoaowayotootransferopurchasingopowerofromotheopresentotootheofuture.264chapteroi6/Theo

6、Monetaryosystemo?o265ocommodityomoney,osuchoasogoid,oisomoneyothatohasointrinsicovaiue:oitowouidobeovaiuedoevenoifoitowereonotFiatomoney,osuchoasopaperodoiiars,oisomoneyowithoutointrinsicovaiue:oitowouidobeoworthiessoifoitowereonotoinotheou.s.oeconomy,omoneyotakesotheoformoofocurrencyoandovariousoty

7、pesoofobankodeposits,osuchoasocheckiTheoFederaioReserve,otheocentraiobankoofotheounitedostates,oisoresponsibieofororeguiatingotheou.s.omonetachairmanoisoappointedobyotheopresidentoandoconfirmedobyocongressoeveryofouroyears.DTheochairmanoisotheoieaFederaioopenoMarketocommittee,owhichomeetsoaboutoever

8、yosixoweeksotooconsiderochangesoinomonetaryopoiicy.Bankdepositorsprovideresourcestobanksbydepositingtheirfundsintobankaccounts.Thesedepositsarepartofabanksliabilities.Bankownersalsoprovideresources(calledbankcapital)forthebank.Becauseofleverage(theuseofborrowedfundsforinvestment),asmallchangeintheva

9、lueofabanksassetscanleadtoalargechangeinthevalueofthebankscapital.Toprotectdepositors,bankregulatorsrequirebankstoholdacertainminimumamountofcapital.TheFedcontrolsthemoneysupplyprimarilythroughopen-marketoperations.Thepurchaseofgovernmentbondsincreasesthemoneysupply,andthesaleofgovernmentbondsdecrea

10、sesthemoneysupply.TheFedalsousesothertoolstocontrolthemoneysupply.Itcanexpandthemoneysupplybydecreasingthediscountrate,increasingitslendingtobanks,loweringreserverequirements,ordecreasingtheinterestrateonreserves.Itcancontractthemoneysupplybyincreasingthediscountrate,decreasingitslendingtobanks,rais

11、ingreserverequirementsorincreasingtheinterestrateonreserves.Whenindividualsdepositmoneyinbanksandbanksloanoutsomeofthesedeposits,thequantityofmoneyintheeconomyincreases.Becausethebankingsysteminfluencesthemoneysupplyinthisway,theFedscontrolofthemoneysupplyisimperfect.TheFederalReservehasinrecentyear

12、ssetmonetarypolicybychoosingatargetforthefederalfundsrate,ashort-terminterestrateatwhichbanksmakeloanstooneanother.AstheFedachievesitstarget,itadjuststhemoneysupply.CHAPTEROUTLINE:TheMeaningofMoneyBegirtheanalysisayasIJngstudents,Whatismoney?266?Chapter16/TheMonetarySystemDefinitionofmoney:thesetofa

13、ssetsinaneconomythatpeopleregularlyusetobuygoodsandservicesfromotherpeople.TheFunctionsofMoneyMoneyservesthreefunctionsinoureconomy.Definitionofmediumofexchange:anitemthatbuyersgivetosellerswhentheywanttopurchasegoodsandservices.Definitionofunitofaccount:theyardstickpeopleusetopostpricesandrecorddeb

14、ts.Definitionofstoreofvalue:anitemthatpeoplecanusetotransferpurchasingpowerfromthepresenttothefuture.Definitionofliquidity:theeasewithwhichanassetcanbeconvertedintotheeconomysmediumofexchange.Moneyisthemostliquidassetavailable.FYI:WhyCreditCardsArentMoneyCreditcardsarenotaformofmoney;whenapersonuses

15、acreditcard,heorsheissimplydeferringpaymentfortheitem.StudentswilllikelwanttotartIghtiTwithadiscLssionothefunctionsthatmoneyserves.Stopthet,Asktheminsteactodescrtemoney.Holdupadolla-diiandapieceofpapercuttoesamesize,Ask.thestudentwhichtheywculcpreferandwhyOtherassets(suchasstocks,bonds,andrealestate

16、)varyintheirliquidity.Whenpeopledecidehowtoallocatetheirwealth,theymustbalancetheliquidityofeachpossibleassetagainsttheassetsusefulnessasastoreofvalue.TheKindsofMoneyDefinitionofcommoditymoney:moneythattakestheformofacommoditywithintrinsicvalue.Definitionoffiatmoney:moneywithoutintrinsicvaluethatisu

17、sedasmoneybecauseofgovernmentdecree.IntheNews:WhyGold?Historically,societieshaveusedgold,ratherthanothercommodities,forcommoditymoney.ThisarticlefromNPRMorningEditiondescribeswhygoldisthebestchoiceforcommoditymoney.MoneyintheU.S.EconomyThequantityofmoneycirculatingintheUnitedStatesissometimescalledt

18、hemoneystock.Includedinthemeasureofthemoneysupplyarecurrency,demanddeposits,andothermonetaryassets.Definitionofcurrency:thepaperbillsandcoinsinthehandsofthepublic.Definitionofdemanddeposits:balancesinbankaccountsthatdepositorscanaccessondemandbywritingacheck.Chapter16/TheMonetarySystem?267Figure1sho

19、wsthemonetaryassetsincludedintwoimportantmeasuresofthemoneysupply,M1andM2.PcintcuttosLidentsjiatcurrencyonlyrnakesupebout30%ofthevslueofMl,widitheremaining70%intheform3fche匚kingdeposts.StudentsneedtourderstardthatthsmajorityofthemoneyintheeccriDTyisactuallymadeupcfaccountbalancesrathe-thaistad5izecl

20、assPurposeThisacuityintroducestherdeofthehederalReserveincontrollingthemoreysupply.InstructionsAd;theclassbota;eadollarbllfromAalietsor3$5【$10420,cr3100).Studentswithoutanvcun-enr/cansharewithsornean?whodoes.AstheclasstoreadTheMl.AftEfaminute,askdiemwhat出巴yhaveearned.CommonAnswersandPowitsforDiscuss

21、ionMoststudentEfocuscnthesterrient1_hasnotesleaaitenderroralldebts,publicandprM&te,Thssstatementstheon：ybclj.ngU.SCLrrencyha5thenoteisnetconvertibleintogsldarsiKer.Thiscanbeuseetomtreducethedfferencebeteenfiatmoneyandcommodityrnone”-Someonewiilusuallypointtothephraseprintedatthetopofthefeteofeachbil

22、l；FederalReserveNoteExplaintheFedLtnetionsastheUnitedStatescentralbankccrtrolingemcnevsuppiyandsupplyingcurrencytobanlis.Infoimationabout由亡structureofthefederalReservecanbefoundintheseaitotheleftofWachingtonsportrait.ThewritiraaroundthesedsaysFederdReserveBanknfIftieiassisbiqenough,all12rederafReser

23、veBikswillbelepiesented;BostonihlewYodjPhiadd?hiarRichmond,.At)anta?Ceveland#Chicago；StLouisMinneapolis,KansasCityfDseIse3rdSanFranisco.InisisagoocplacesintroducetneFederalReserveDistrict.andtheBanksrdesinTioseregions.Tliesehicludecheckclearing,holdingcommerddDani-.re&zfveSsupplyngcuirency.lertcfngt

24、ocammefc：dbank巧endcollectingand3nalyzingregcnmleconomicdataC.TheFedsOrganizationTheFedisrunbyaBoardofGovernorswith7memberswhoserve14-yearterms.TheBoardofGovernorshasachairmanwhoisappointedforafour-yearterm.ThecurrentchairmanisBenBernanke.Chapter16/TheMonetarySystem?269TheFederalReserveSystemismadeup

25、of12regionalFederalReserveBankslocatedinmajorcitiesaroundthecountry.Haveskidsrspullcutdo：arbillsaidreadthenamecfthecityofthedistrictbdnkorthebiI.卜0旳已起Tal;esurethattheyareactually-eadingeffdollafhiIssdnot-jstguessingtherasresa?srgedies.OnejobperformedbytheFedistheregulationofbankstoensurethehealthoft

26、henationsbankingsystem.TheFedmonitorseachbanksfinancialconditionandfacilitatesbanktransactionsbyclearingchecks.TheFedalsomakesloanstobankswhentheywanttoborrow.ThesecondjoboftheFedistocontrolthequantityofmoneyavailableintheeconomy.Definitionofmoneysupply:thequantityofmoneyavailableintheeconomy.Defini

27、tionofmonetarypolicy:thesettingofthemoneysupplybypolicymakersinthecentralbank.D.TheFederalOpenMarketCommitteeTheFederalOpenMarketCommittee(FOMC)consistsofthe7membersoftheBoardofInbadu匚巳studentstotheceaofopenmarketoperatiorsbe-erbuzdonotbesurprssdiftheydonottairtionquickly.Youcanreturntothistopiclate

28、rinthechapte-.Governorsand5ofthe12regionalbankpresidents.2.TheprimarywayinwhichtheFedincreasesordecreasesthenumberofdollarsintheeconomyisthroughopenmarketoperations(whichinvolvethepurchaseorsaleofU.S.governmentbonds).a.IftheFedwantstoincreasethesupplyofmoney,itcreatesdollarsandusesthemtopurchasegove

29、rnmentbondsfromthepublicthroughthenationsbondmarkets.b.IftheFedwantstolowerthesupplyofmoney,itsellsgovernmentbondsfromitsportfoliotothepublic.Moneyisthentakenoutofthehandsofthepublicandthesupplyofmoneyfalls.BanksandtheMoneySupplyT；eprocessoToneycreationnthebanldrasystemisoneoFemoredifficultthingstoz

30、eachatthePrincipleslevel,hhaiiyeveryaspectoftiieDfcesswillbene/vtostucesandnothingiscbviousorintuiti*e.Therercre,itisextremelyinportartthateachstepintheprocessisshcvnthroughT-accountssothststudentscanseehe林thebankings/stemcestesmoneyast-aikscarrycuttheirnorTaiftnetionscfacceptingcepositsandgvinaoutl

31、oans270?Chapter16/TheMonetarySystemTheSimpleCaseof100-Percent-ReserveBanking1.Example:Supposethatcurrencyistheonlyformofmoneyandthetotalamountofcurrencyis$100.2.Abankiscreatedasasafeplacetostorecurrency;alldepositsarekeptinthevaultuntilthedepositorwithdrawsthem.a.Definitionofreserves:depositsthatban

32、kshavereceivedbuthavenotloanedout.b.Undertheexampledescribedabove,wehave100-percent-reservebanking.3.ThefinancialpositionofthebankcanbedescribedwithaT-account:StudentswilleithercatchontoT-accountsimmediatelyorbecoirpletelyconfused.Itsegoodideacoexplaintiiemandthsnletsrudentswatverierinsmallgroupsoft

33、woorthree.Yaucandned;eachgrcuptoidentif/thestudentswhowIIrequirendivduahzedattenticn.Themoneysupplyinthiseconomyisunchangedbythecreationofabank.a.Beforethebankwascreated,themoneysupplyconsistedof$100worthofcurrency.b.Now,withthebank,themoneysupplyconsistsof$100worthofdeposits.Thismeansthat,ifbanksho

34、ldalldepositsinreserve,banksdonotinfluencethesupplyofmoney.B.MoneyCreationwithFractional-ReserveBankingDefinitionoffractional-reservebanking:abankingsysteminwhichbanksholdonlyafractionofdepositsasreserves.Definitionofreserveratio:thefractionofdepositsthatbanksholdasreserves.Example:Sameasbefore,butF

35、irstNationaldecidestosetitsreserveratioequalto10%andlendtheremainderofthedeposits.ThebanksT-accountwouldlooklikethis:FIRSTNATIONAL8AIAssetsLiabititiesReservssChapter16/TheMonetarySystem?271LoansWhenthebankmakestheseloans,themoneysupplychanges.a.Beforethebankmadeanyloans,themoneysupplywasequaltothe$1

36、00worthofdeposits.b.Now,aftertheloans,depositsarestillequalto$100,butborrowersnowalsohold$90worthofcurrencyfromtheloans.Therefore,whenbanksholdonlyafractionofdepositsinreserve,bankscreatemoney.6.Notethat,whilenewmoneyhasbeencreated,sohasdebt.Thereisnonewwealthcreatedbythisprocess.C.TheMoneyMultiplie

37、rThecreationofmoneydoesnotstopatthispoint.Borrowersusuallyborrowmoneytopurchasesomethingandthenthemoneylikelybecomesredepositedatabank.Supposeapersonborrowedthe$90topurchasesomethingandthefundsthengetredepositedinSecondNationalBank.HereisthisbanksT-account(assumingthatitalsosetsitsreserveratioto10%)

38、:4.Ifthe$81inloansbecomesredepositedinanotherbank,thisprocesswillgoonandon.5.Eachtimethemoneyisdepositedandabankloaniscreated,moremoneyiscreated.Definitionofmoneymultiplier:theamountofmoneythebankingsystemgenerateswitheachdollarofreserves.moneymdltiplisr=l/reser/eratioInourexample,themoneysupplyincr

39、easedfrom$100to$1,000aftertheestablishmentoffractional-reservebanking.ALTERNATIVECLASSROOMEXAMPLE:Reserveratio=12.5%Moneymultiplier=1/0.125=8Spendsometimeshowingstudentshow岀已mjitiplierchancesasreserrequirementsthcnge.Ha.esireyouexplainwhytheTutipierchanges/henthereserveradocharges.Studentswiilcatrho

40、ntotherrsthfairlyquicldy;itis；einiLiitiontnatismostdifficultfortnem.272?Chapter16/TheMonetarySystemD.BankCapital,Leverage,andtheFinancialCrisisof2008-2009Inreality,banksalsogetfundsfromissuingdebtandequity.Definitionofbankcapital:theresourcesabanksownershaveputintotheinstitution.Amorerealisticbalanc

41、esheetforabank:MOREREALISTICNATIONALBApansionMaterialsneeded:twovqunteers,apajzerwiLi$iQOCTwcittenanitTime:25mutesClasslirrihatiorisNotwinanysizeclassPurposeThisactvit/demDnstratestheroleo士已balingsysteminexpandingthernDneysiply.InstructionsThetACvclurteersaret)cn05,b)butcanloantheother$800.Hsvetheba

42、nkertsaroff20%ofthebillandgivetheresttoaiotherstudent.Reflsethebanksbalarcesheets.Nowtheborrowerspendsthe$800aidth已recipientdeposrtsitin曰baik.THsbanknowhas$300indepositsand$淡0incash.OFthat,160needstobekeDtinreserveand$640cmnbelent.Havethebari.efsave20%ofthepaperandgivethet?arcthereagerborrower.Revis

43、ethebafiLsbalance5heets.antinLiethisprocessforafewtnoreiterations.Atliieend,askeveryontwhoh比moneyinthebaikzostand.1textaldejoatsiritkiebankwillfarexce&dtheinitialthattheFedputintotheeconoroy.Snowihefinalbalaresheetforea：hbank.PointsforDiscussionBanksareimportanttotheprecessofmoneycreaton.Thebankings

44、ystem,asawholerliterallyexpandsthemoneysupply.I;theprocessiscarriedonfarenougn,youcanderivethemcneymultiplier.TheFederalFundsRateDefinitionoffederalfundsrate:theshort-terminterestratethatbankschargeoneanotherforloans.Whenthefederalfundsraterisesorfalls,otherinterestratesoftenmoveinthesamedirection.I

45、nrecentyears,theFedhassetatargetforthefederalfundsrate.IntheNews:BernankeontheFedsToolboxDuringthefinancialcrisisof2008and2009,theFedexpandedreservestohelpstrugglingbanks.ThisisanarticlewrittenbyFedchairman,BenBernanke,discussingtheFedsoptionsforreversingthispolicyoncetheeconomyrecoversfromthisdeepr

46、ecession.276?Chapter16/TheMonetarySystemSOLUTIONSTOTEXTPROBLEMS:QuickQuizzesThethreefunctionsofmoneyare:(1)mediumofexchange;(2)unitofaccount;and(3)storeofvalue.Moneyisamediumofexchangebecausemoneyistheitempeopleusetopurchasegoodsandservices.Moneyisaunitofaccountbecauseitistheyardstickpeopleusetopost

47、pricesandrecorddebts.Moneyisastoreofvaluebecausepeopleuseittotransferpurchasingpowerfromthepresenttothefuture.TheprimaryresponsibilitiesoftheFederalReservearetoregulatebanks,toensurethehealthofthebankingsystem,andtocontrolthequantityofmoneythatismadeavailableintheeconomy.IftheFedwantstoincreasethesu

48、pplyofmoney,itusuallydoessobycreatingdollarsandusingthemtopurchasegovernmentbondsfromthepublicinthenationsbondmarkets.Bankscreatemoneywhentheyholdafractionoftheirdepositsinreserveandlendouttheremainder.IftheFedwantedtouseallofitstoolstodecreasethemoneysupply,itwould:(1)sellgovernmentbondsfromitsport

49、foliointheopenmarkettoreducethenumberofdollarsincirculation;(2)increasereserverequirementstoreducethemoneycreatedbybanks;(3)increasetheinterestrateitpaysonreservestoincreasethereservesbankswillchoosetohold;and(4)increasethediscountratetodiscouragebanksfromborrowingreservesfromtheFed.QuestionsforRevi

50、ew1.Moneyisdifferentfromotherassetsintheeconomybecauseitisthemostliquidassetavailable.Otherassetsvarywidelyintheirliquidity.Commoditymoneyismoneywithintrinsicvalue,likegold,whichcanbeusedforpurposesotherthanasamediumofexchange.Fiatmoneyismoneywithoutintrinsicvalue;ithasnovalueotherthanitsuseasamediu

51、mofexchange.Oureconomyusesfiatmoney.Demanddepositsarebalancesinbankaccountsthatdepositorscanaccessondemandsimplybywritingacheckorusingadebitcard.Theyshouldbeincludedinthesupplyofmoneybecausetheycanbeusedasamediumofexchange.TheFederalOpenMarketCommittee(FOMC)isresponsibleforsettingmonetarypolicyinthe

52、UnitedStates.TheFOMCconsistsofthe7membersoftheFederalReserveBoardofGovernorsand5ofthe12presidentsofFederalReserveBanks.MembersoftheBoardofGovernorsareappointedbythepresidentoftheUnitedStatesandconfirmedbytheU.S.Senate.ThepresidentsoftheFederalReserveBanksarechosenbyeachbanksboardofdirectors.IftheFed

53、wantstoincreasethesupplyofmoneywithopen-marketoperations,itpurchasesU.S.governmentbondsfromthepublicontheopenmarket.Thepurchaseincreasesthenumberofdollarsinthehandsofthepublic,thusraisingthemoneysupply.Banksdonothold100%reservesbecauseitismoreprofitabletousethereservestomakeloans,whichearninterest,i

54、nsteadofleavingthemoneyasreserves.TheamountofreservesChapter16/TheMonetarySystem?277banksholdisrelatedtotheamountofmoneythebankingsystemcreatesthroughthemoneymultiplier.Thesmallerthefractionofreservesbankshold,thelargerthemoneymultiplier,becauseeachdollarofreservesisusedtocreatemoremoney.BankBwillsh

55、owalargerchangeinbankcapital.ThedecreaseinassetswillrenderBankBinsolventbecauseitsassetswillfallbelowitsliabilities,adecreaseinbankcapitalof140%.BankAwillsufferalargedeclineinbankcapital(70%)butwillremainsolvent.ThediscountrateistheinterestrateonloansthattheFederalReservemakestobanks.IftheFedraisest

56、hediscountrate,fewerbankswillborrowfromtheFed,sobothbanksreservesandthemoneysupplywillbelower.Reserverequirementsareregulationsontheminimumamountofreservesthatbanksmustholdagainstdeposits.Anincreaseinreserverequirementsraisesthereserveratio,lowersthemoneymultiplier,anddecreasesthemoneysupply.TheFedc

57、annotcontrolthemoneysupplyperfectlybecause:(1)theFeddoesnotcontroltheamountofmoneythathouseholdschoosetoholdasdepositsinbanks;and(2)theFeddoesnotcontroltheamountthatbankerschoosetolend.TheactionsofhouseholdsandbanksaffectthemoneysupplyinwaystheFedcannotperfectlycontrolorpredict.QuickCheckMultipleCho

58、ice1.ccdacaProblemsandApplications1.a.AU.S.pennyisconsideredmoneyintheU.S.economybecauseitisusedasamediumofexchangetobuygoodsorservices,itservesasaunitofaccountbecausepricesinstoresarelistedintermsofdollarsandcents,anditservesasastoreofvalueforanyonewhoholdsitovertime.AMexicanpesoisnotconsideredmone

59、yintheU.S.economy,becauseitisnotusedasamediumofexchange,andpricesarenotgivenintermsofpesos,soitisnotaunitofaccount.Itcouldserveasastoreofvalue,though.APicassopaintingisnotconsideredmoney,becauseyoucannotexchangeitforgoodsorservices,andpricesarenotgivenintermsofPicassopaintings.Itdoes,however,serveas

60、astoreofvalue.Aplasticcreditcardissimilartomoney,butrepresentsdeferredpaymentratherthanimmediatepayment.Socreditcardsdonotfullyrepresentthemediumofexchangefunctionofmoney,noraretheystoresofvalue,becausetheyrepresentshort-termloansratherthanbeinganassetlikecurrency.278?Chapter16/TheMonetarySystem2.Wh