Money Supply Introduction

Question 1

money supply is

Answer 1

the stock of money held by the public at a given point.
it is fixed or perfectly inelastic

Question 2

definitions of ms (5)

Answer 2

1. Notes and coins in circulation
2. Narrow ms (M1)
3. Broad ms
4. consolidated broad ms
5. M4

Question 3

Narrow ms

Answer 3

M1 = Cp +DDp

Question 4

Broad Ms

Answer 4

M2 = M1 + TSDp

Question 5

Consolidated Broad Ms

Answer 5

M2b = M2 +50% TSD nrfc +RD fcbu

Question 6

M4

Answer 6

M4 = M2b + LSB + RFC

Question 7

FCBU’s? Who do they grant loans to

Answer 7

Foreign currency Banking Units.
grant loans to 1.non residents
2. commercial banks
3. BOI Enterprise
4. other residents aproved by cbsl

Question 8

Determinants of Ms

Answer 8

net domestic borowings of the banking system
“ “ assets “
“ foreign assets “
“ other assets

Question 9

base money

Answer 9

monetary base, high powered money, reserve money , monetary liabilities of cbsl

MB = Currency held by public + Reserves /

MB = Currency held by public + Currency held by combanks + comback deposits in cbsl

Question 10

Ms equation using money multiplier

Answer 10

Ms = Money multiplier x High powered money (M=Kh)

Question 11

M1 , M2 , M2b multipliers

Answer 11

M1 / M2 / M2b
_________________
HIGH POWERED MONEY (Mb)

Question 12

liabilities of cbsl

Answer 12

public currency
currency of combanks
deposits of combanks with cbsl

Question 13

cbsl determinants of base money

Answer 13

net domestic assets of cbsl
net foreign assets “
other assets “