1)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Other Non-monetary Liabilities Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 1000 500 10 600 150 50 80

The currency / deposit ratio has been ascertained as 0.25. The amount of Government money and Government deposits is 15 and 25 MUC respectively. Total money supply in the economy is 4500 MUC. (i) (ii) Calculate the reserve ratio imposed by the bank. If there is an increase of 125 MUC Central Bank credit to the government accompanied by Government purchase of foreign exchange worth 15 MUC from the Central Bank, calculate the increase in money supply in the economy.

2)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Other Non-monetary Liabilities Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 1000 500 20 600 150 50 100

The currency / deposit ratio and the reserve ratio have been ascertained as 0.20 and 0.30 respectively. The amount of Government money and Government deposits are 50 and 30 MUC respectively. (i) (ii) Calculate the money supply in the economy. Suppose there is an increase of 130 MUC Central Bank credit to the Government accompanied by government purchase of foreign exchange worth 30 MUC from the Central Bank. If the Central Bank desires to contain the money supply at the original level even after this transaction and for this purpose alters the reserve ratio, calculate the new reserve ratio.

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3)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Deposit of Banks Other Non-monetary Liabilities Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 700 300 50 10 400 200 10 20

The amount of Government money is negligible and hence can be ignored and the amount of Government deposit is 20 MUC. Total money supply in the economy is fixed at 2400 MUC. The reserve ratio has been ascertained as 0.10. (i) Calculate the currency / deposit ratio. (ii) Suppose there is an increase of 130 MUC Central Bank credit to the government accompanied by government purchase of foreign exchange worth 30 MUC from the Central Bank. If the Central Bank desires to contain the money supply at the original level even after this transaction and for this purpose alters the reserve ratio, calculate the new reserve ratio. 4) The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Deposit of Banks Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 700 300 50 400 200 10 20

The amount of Government money and total money supply in the economy is fixed at 50 MUC and 2400 MUC respectively. The currency / deposit ratio and reserve ratio have been ascertained as 0.35 and 0.10 respectively. (i) (ii) Calculate the Non-monetary Liabilities of the Central Bank. Suppose there is an increase of 150 MUC Central Bank credit to the government accompanied by government purchase of foreign exchange worth 50 MUC from the Central Bank. If the Central Bank desires to contain the money supply at the original level even after this transaction and for this purpose alters the reserve ratio, calculate the new reserve ratio.

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5)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Government Deposits Other Non-monetary Liabilities Net Worth Other Assets MUC 25 10 600 80

The currency / deposit ratio and the reserve ratio have been ascertained as 0.25 and 0.072 respectively. The amount of Government money is 15 MUC. Total money supply in the economy is 4500 MUC. (i) (ii) Calculate the Monetary Assets of the Central Bank. If there is an increase of 125 MUC Central Bank credit to the government accompanied by government purchase of foreign exchange worth 15 MUC from the Central Bank, calculate the increase in money supply in the economy.

6)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Other Non-monetary Liabilities Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 1000 500 10 600 150 50 80

The currency / deposit ratio has been ascertained as 0.25. The amount of Government money and Government deposits is 15 and 25 MUC respectively. Total money supply in the economy is 4500 MUC. (i) (ii) Calculate the reserve ratio imposed by the bank. If there is an increase of 125 MUC Central Bank credit to the government accompanied by Government purchase of foreign exchange worth 15 MUC from the Central Bank, calculate the increase in money supply in the economy.

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7)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Other Non-monetary Liabilities Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 1000 500 20 600 150 50 100

The currency / deposit ratio and the reserve ratio have been ascertained as 0.20 and 0.30 respectively. The amount of Government money and Government deposits are 50 and 30 MUC respectively. (i) Calculate the money supply in the economy. (ii) Suppose there is an increase of 130 MUC Central Bank credit to the Government accompanied by government purchase of foreign exchange worth 30 MUC from the Central Bank. If the Central Bank desires to contain the money supply at the original level even after this transaction and for this purpose alters the reserve ratio, calculate the new reserve ratio. 8) The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Deposit of Banks Other Non-monetary Liabilities Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 700 300 50 10 400 200 10 20

The amount of Government money is negligible and hence can be ignored and the amount of Government deposit is 20 MUC. Total money supply in the economy is fixed at 2400 MUC. The reserve ratio has been ascertained as 0.10. (i) (ii) Calculate the currency / deposit ratio. Suppose there is an increase of 130 MUC Central Bank credit to the government accompanied by government purchase of foreign exchange worth 30 MUC from the Central Bank. If the Central Bank desires to contain the money supply at the original level even after this transaction and for this purpose alters the reserve ratio, calculate the new reserve ratio.

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9)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Credit to Government Credit to Banks Deposit of Banks Net Worth Credit to the Commercial Sector Foreign Exchange Assets Other Assets MUC 700 300 50 400 200 10 20

The amount of Government money and total money supply in the economy is fixed at 50 MUC and 2400 MUC respectively. The currency / deposit ratio and reserve ratio have been ascertained as 0.35 and 0.10 respectively. (i) (ii) Calculate the Non-monetary Liabilities of the Central Bank. Suppose there is an increase of 150 MUC Central Bank credit to the government accompanied by government purchase of foreign exchange worth 50 MUC from the Central Bank. If the Central Bank desires to contain the money supply at the original level even after this transaction and for this purpose alters the reserve ratio, calculate the new reserve ratio.

10)

The following balances have been taken from the balance sheet of the Central Bank of an economy. Item Government Deposits Other Non-monetary Liabilities Net Worth Other Assets MUC 25 10 600 80

The currency / deposit ratio and the reserve ratio have been ascertained as 0.25 and 0.072 respectively. The amount of Government money is 15 MUC. Total money supply in the economy is 4500 MUC. (i) Calculate the Monetary Assets of the Central Bank. (ii) If there is an increase of 125 MUC Central Bank credit to the government accompanied by government purchase of foreign exchange worth 15 MUC from the Central Bank, calculate the increase in money supply in the economy.

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11)

The net worth of a Central Bank is 1000and the money supply in the economy is 90,400. The monetary liabilities of the Central Bank are 22,600. Because of intervention in the foreign exchange market, net worth of the Central Bank is expected to erode by 50% in the next period. If the Central Bank desires to maintain the current level of money supply by changing reserve ratio, what should be the new reserve ratio? (Assume currency/deposit ratio to be 24%). The monetary liabilities of the Central Bank of an economy are Rs. 20,000 crore. The government money in the economy is Rs. 200 crore. Currency/deposit ratio for the economy is estimated at 0.2 and reserve ratio imposed by the central bank is 5%. If the foreign exchange reserves of the country decline by Rs. 200 crore, what would happen to the money supply? Monetary liabilities of the Central bank of an economy are 20,000 CUC (Crore units of Currency) and the government money is 2000 CUC. The currency-deposit ratio is estimated to be 0.25. If the Central bank wants to set the money supply at 50,000 CUC, what should be the reserve ratio the Central Bank should impose on banks to achieve the targeted money supply? The monetary liabilities of the Central Bank and the government money in circulation in an economy are 990 CUC and 10 CUC respectively. The currency-deposit ratio is estimated to be 20%. If there is an increase of 100 CUC in Central Bank credit to government, accompanied by government purchase of foreign exchange worth 10 CUC from the Central Bank, what would be the money supply in the economy? (Assume reserve ratio is 10%) The high-powered money in an economy is 3000 CUC. Current money supply in the economy is 12000 CUC. The currency-deposit ratio is estimated to be 0.20 and reserve ratio imposed by the Central Bank is 0.10. If the banking sector maintains excess reserves equivalent to 10% of their deposits, what would be the money supply? *****

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