Each country has its own central bank, which is responsible for conducting monetary policy to achieve the macroeconomic

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Each Country Has Its Own Central Bank Which Is Responsible For Conducting Monetary Policy To Achieve The Macroeconomic 1 (65.54 KiB) Viewed 41 times

Each country has its own central bank, which is responsible for conducting monetary policy to achieve the macroeconomic objectives of the country. As a stabilizing force, monetary policy aims at correcting market imperfections to ensure financial stability and reducing the risk of financial crisis. a. Explain how the central bank conducts monetary policy during a recession. b. Explain why an increase in the money supply can affect interest rates in different ways. Be sure to include the potential impact of the supply of and demand for loanable funds. You may use graphs to illustrate your answer. C. In view of the current war in the Ukraine, interpret how the European central bank can use monetary policy to respond to the impact of war on rising prices, employment, and economic growth. d. Investor deposits the amount of $1 million in his/her bank account. If the reserve ratio requirement is 10%: 1. How much the bank has in excess reserves? 2. What is the money multiplier of this deposit? 3. If the investor decided to keep 20% of his/her deposit in cash, what impact this will have on money supply? What is the value of the multiplier?