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Homework answers / question archive / 1
1. Define velocity of money and discuss the major determinants of velocity.
2. Assume GDP is currently $11,700 billion per year and the quantity of money is $650 billion. What is the velocity of money? The nation collectively holds enough money to finance how many days worth of GDP expenditure?
3. If bank A borrows $30 million from bank B, what happens to the reserves in bank A? In the banking system? Please explain.
4. If bank A borrows $30 million from the Fed, what happens to reserves in bank A?. In the banking system? Please explain.
