Assignment on Monetary Policy and Fiscal Policy

Running head: MONETARY POLICY AND FISCAL POLICY
Monetary Policy and Fiscal Policy
Name of the Student
Name of the University
Course ID

MONETARY POLICY AND FISCAL POLICY1
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................2
Question 3........................................................................................................................................4
Question 4........................................................................................................................................5
References........................................................................................................................................8

MONETARY POLICY AND FISCAL POLICY2
Question 1
i)
Coins in the piggy banks are part of money supply measure of M1 since these coins are
part of currency in circulation in the economy.
ii)
Funds in the checking account at First National Bank the is counted in M1 since this
money can be spent whenever needed (Uribe & Schmitt-Grohe, 2017).
iii)
Funds in the saving account at Second National Bank is not part of M1 money supply
since saving account is a part of financial which is not counted as M1.
iv)
Traveler’s check that is left over from trip to Germany is a part of M1 since it is counted
as demand deposit component of the checkable deposit which constitutes M1.
v)
The available balance on Citico Gold Master Card is not a part of M1 since it is
considered as a loan from Citico.
Question 2
a)
Given reserve ratio for the bank is 5%. As given in balance sheet, stockholder’s deposit
in the bank is $70,000. Therefore, required reserve of the bank is