Deposit Expansion Stages Problem Exam 2 Review Deposit 1 RR 1000 1 0 2 At Stage 3 NRR is 128 and 2440 in Cumulative New Deposits 128 is 1 5 of 2440 1800 640 RR 0 2 5000 1000 5 HW 3 11 Which of the following is an advantage of using money as a medium of exchange D It avoids having to rely on barter the exchange of one good or service for another 13 If the market interest rate is 8 what is Bolton Bank s opportunity cost of holding excess reserves If they are holding excess reserves they are not making any interest on them answer is 8 excess reserves They would hold money because they are fearful something bad may be happening speculative demand Capital requirement The answer is 5 6 million RR is 10 If a bank s primary mission is price stability then it is going to keep prices stable no matter what is happening with unemployment If Fed is told to keep unemployment rate below 4 they would have to follow an expansionary policy to expand aggregate demand to get it there If they were going to do that in certain circumstances that may require a very high inflation rate but that s another rule
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