Ecn205 money & banking Problem set # 4

6.17

Suppose there is an increase in investors willingness to hold bonds at a given price. Use the model for the demand and supply of bonds to show that the pact on the equilibrium bond price depends on how sensitive the quantity supplied of bonds is to the bond price.

2.3 Explain how money encourages specialization, and how specialization improves everyones standard of living. 2.10 You have decided to issue your own currency and use your computer to produce some impressive looking notes. What could you do to increase the chances of these notes being accepted as a means of payment? 2.15 What factors should you take into account when considering using the following assets as stores of value? a. Gold b. Real estate c. Stocks d. Government bonds 2.16 Under what circumstances might money in the form of currency be the best option as a store of value? 2.17 Suppose a significant fall the price of certain stocks caused the market makers in those stocks to worry about their funding liquidity. Under what circumstances might that development lead to liquidity problems in markets for other assets?

2.19 Suppose a regulator proposes placing an upper limit on the interest rate payable on checking and saving accounts. How would this help or hinder regulation of the banking system during a period of high interest rates? 2.20 If money growth is related to inflation, what would you expect to happen to the inflation rates of countries that join a monetary union and adopt a common currency such as the euro?