Question

Endogenous Money Theory offers a different way of understanding how banks create money. In this conception:...

Endogenous Money Theory offers a different way of understanding how banks create money. In this conception: (choose all that are correct)

A.

the commercial banking system creates money as a multiple of base money
B.

the Central Bank determines how much money the commercial banking system can crea
C.

the commercial banking system drives the money supply through its lending process
D.

the Central Bank creates the entire money supply
E.

the banking system will creates loans that it feels are profitable and find the necessary reserves later
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Endogenous money is an economy’s supply of money that is determined endogenously—that is, as a result of the interactions of other economic variables, rather than exogenously (autonomously) by an external authority such as a central bank.The theoretical basis of this position is that money comes into existence through the requirements of the real economy and that the banking system reserves expand or contract as needed to accommodate loan demand at prevailing interest rates.

Therefore, the correct options are: Option A, C and E.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What are reserve requirements? What happens to the money supply when a central bank raises reserve...
What are reserve requirements? What happens to the money supply when a central bank raises reserve requirements? Why don’t banks hold 100 percent reserves? How is the amount of reserves banks hold related to the amount of money the banking system creates?
Central Banks System Suppose a banking system with the following balance sheet has no excess reserves....
Central Banks System Suppose a banking system with the following balance sheet has no excess reserves. Assume that banks will make loans in the full amount of any excess reserves that they acquire and will immediately be able to eliminate loans from their portfolio to cover inadequate reserves. Assets Liabilities (in Billions) (in Billions) Tota reserves $150 Transactions accounts $500 Securities $150 Loans $200 Total $500   Total $500 You are required to answer the following Questions: 1) What is the...
1) A commercial bank create money by: a-Lending its excess reserves b-Purchasing currency from the central...
1) A commercial bank create money by: a-Lending its excess reserves b-Purchasing currency from the central bank c-Buying bonds from the central bank d-Printing more checks 5)The money multiplier determines how much: Real GDP will be expanded given an increase in autonomous investment The monetary base will be expanded given a change in the quantity of money The quantity of money will be expanded given a change in the monetary base Money demand will expand given a change in the...
Why dont banks hold 100 percent reserves ? How is the amount of reserves bank hold...
Why dont banks hold 100 percent reserves ? How is the amount of reserves bank hold related to the amount of money the banking system creates?
Although the U.S. Federal Reserve doesn't use changes in reserve requirements to manage the money supply,...
Although the U.S. Federal Reserve doesn't use changes in reserve requirements to manage the money supply, the central bank of Albernia does. The commercial banks of Albernia have $100 million in reserves and $1,000 million in checkable deposits; the initial required reserve ratio is 10%. The commercial banks follow a policy of holding no excess reserves. The public holds no currency, only checkable deposits in the banking system. How will the money supply change if the minimum reserve ratio rises...
When the Bank of Canada wants to induce a monetary expansion, a. it can provide commercial...
When the Bank of Canada wants to induce a monetary expansion, a. it can provide commercial banks with excess reserves and has considerable influence over how many new loans banks will make to the public.   b. it can provide commercial banks with excess reserves but how many new loans will be made by the commercial banks is uncertain.   c. it cannot generally provide commercial banks with excess reserves and how many new loans will be made by the commercial banks...
Initially, the Republic of Gorgonzola has no commercial banking system. Then, the government directs the central...
Initially, the Republic of Gorgonzola has no commercial banking system. Then, the government directs the central bank of Gorgonzola to put into circulation 2,000,000 identical paper notes, called guilders. The central bank prints the guilders and distributes them to the population. In order to safeguard the money, some Gorgonzolan entrepreneurs set up a system of commercial banks. When people need to make a payment, they can either withdraw their guilders or, more conveniently, write a check on their account. Checks...
1. The three players in the money supply process include A. Banks, depositors and the US...
1. The three players in the money supply process include A. Banks, depositors and the US Treasury B. Banks, borrowers and the Fed      C. Banks, depositors and the Fed D. Banks, depositors and borrowers 2. The monetary base consists of:      A. Currency in circulation and Federal Reserve notes      B. Currency in circulation and the US treasury’s monetary liabilities      C. Currency in circulation and reserves      D. Reserves and vault cash 3. When the Fed wants to...
Table A below shows abbreviated balance sheets for the central bank in the country of Beckland...
Table A below shows abbreviated balance sheets for the central bank in the country of Beckland and B shows tables for its whole commercial banking system. The target reserve ratio for the banks is 10 percent. (All figures are in billions of dollars.) a. Suppose that the Bank of Beckland buys $2 billion of government securities (T-bills) from the commercial banks. Show the immediate effects of this transaction on the balance sheets in column (1) of Tables A and B....
State whether the following actions increase, decrease or do not change the money supply. (5 pts...
State whether the following actions increase, decrease or do not change the money supply. (5 pts each, Total : 25 pts): Central bank made an open market purchase of 1 Million TL. Central bank increased the required reserve ratio Central bank provided 1 Million TL worth of loans to the banking system. Banks decreased their excess reserves because the economy is in the expansion phase Agents increased their curreny holding due to a financial panic
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT