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List all of the possible functions of a central bank and consider which ones can be adequately performed without a central bank being in existence.
Outline the arguments for and against fixed and variable rate tenders as the instrument for the provision by the central bank of liquidity to the banking system
Why is the accountability of the central bank an important issue? Explain this statement. How did it relate to question of the likely future strength of euro?
Why might the business cycles of the UK not be synchronized with those of the 12 current members of the euro area?
What might this tell you about market expectations of future interest rate developments. Make explicit any assumptions you have to make.
Why might central banks be concerned about major price fluctuations inasset markets?
Why do money market rates move so closely together? Why do central bank repo deals have such a large impact on money market interest rates?
Explain how capital adequacy requirements impose a tax on banking. Why might presence of capital risk aversion in the bond market make the conduct of policy?
Explain how central banks are able to set the level of short-term interest rates.
Outline the disadvantages of trying to limit the growth of money and credit by ‘direct' controls.
Describe the effect of such a policy according to the three business cycle models if this increase in taxes is fully anticipated by economic agents.
Describe the effects on output and inflation depending on whether the surge in consumer's confidence was anticipated or unanticipated.
How do the traditional Keynesian, new Keynesian, and real business cycle models differ in their analysis of the effects of antiinflation policy?
How do new Keynesian ideas about expectations affect the IS and aggregate demand curves?
What are the key ideas of the real business cycle model? How does it explain business cycle fluctuations?
Why was the speculative demand for money so controversial? Why did the testing of the demand for money grow rapidly?
Why is the speculative demand for money a demand for idle balances? What happens to the velocity of money when idle balances increase?
How is the interpretation of the Quantity Theory equation affected by the assumption of endogenous money?
Why is the Quantity Theory of Money not a theory of the demand for money? What is it a theory of?
Explain what is meant by a repurchase agreement and work an example to show how, by changing the terms of a repo deal, the central bank can raise.
Distinguish between interest-endogeneity and base-endogeneity. Why, in practice, are commercial banks unconstrained in their access to reserves?
List the problems faced by the monetary authorities in preparing money supply statistics.
List advantages and disadvantages of holding savings in form of money. Can you provide some examples? Are purely financial transactions necessarily speculative?
What is meant by a stable equilibrium? Draw simple diagrams showing (a) a stable equilibrium; (b) an unstable equilibrium.
The text refers to the treatment of the market in economics as a theoretical concept. Is this change likely to have had any economic significance? If so, why?