*DONT USE ANY SOURCES*
Short Essay (SE) Assignments
SE’s are submitted in the “Assignments” dropbox. Students’ submissions must be 1‐page only. They must include the student’s first and last names at the top of the assignment. Otherwise, 2‐ points will be taken off the grades (1‐point for the name and 1‐point for the SE#). In addition, note that Turnitin® will be used to check the originality of the submissions.
Here are the instructions:
ECON 2200 Essay on Money & the FED
Instructions:
Students will prepare a Word document. A response to each question is prepared as a separate paragraph. Please paste the question into the Word document, and provide the answer underneath. Please space and separate paragraphs. Use Word to spell‐check and grammar‐check your writing.
The Word document will be submitted as an attachment to the Dropbox. Retain the electronic copy of the Word document in case you need to resubmit due to D2L error.
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Answer the following 5 Questions: (Note: Question 4 has multiple parts to it)
- List the three functions of money.
- Explain what M1 consists of.
- Suppose Karen transfers $500 from her saving account to her basic checking account. How will this transaction affect M1 and M2?
- Answer the following questions using the 1st National Bank’s balance sheet. See below.
1st National Bank of Kennesaw
ASSETS LIABILITIES
| Total Reserves | $50,000 | Total Deposits | $400,000 |
| Required Reserves | ? | ||
| Excess Reserves | $10,000 | ||
| Loans | ? | Net Worth | ? |
| Total | $700,000 | Total | $700,000 |
4-a. Given the balance sheet of 1st National Bank of Kennesaw, how much does the bank have in required reserves?
4-b. Given the balance sheet of 1st National Bank of Kennesaw, what is the required reserve ratio?
4-c. Given the balance sheet of 1st National Bank of Kennesaw, what is the amount of loans?
4-d. Given the balance sheet of 1st National Bank of Kennesaw, what is 1st National Bank’s Net Worth?
- Explain how the Fed’s buying of US government securities in the open market will affect the money supply