“Money and the Financial System” Please respond to the following:
- From the scenario, describe the business implications of an increase in the required reserve ratio from 4% to 7%. Explain how that would affect the business’s strategic options.
- Explain how the change in the required reserve ratio would influence the business price levels and consequently the price levels in the economy. Determine the impact the interest rate would have in relation to the copy center’s borrowing decision.
Question 2
“Money, Banking, and the Financial System” Please respond to the following:
- From the e-Activity, assess the implications of changing the federal funds rate from 4.5% to 2%. Explain how this change will affect the economy’s performance.
- From the e-Activity, analyze the relationship between the indicators, primarily the inflation rate and unemployment rate. As one indicator changes (increases, decreases, remains static) explain what happens to the other. (i.e., Does it also increase, decrease, remain static at the same rate of change?) Explain the reasons for this type of relationship and provide one real-world example that supports your explanation.
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