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“Monetary policy makers react to changes in current inflation by changing the real interest rate”. Discuss.
Why monetary base is called as high powered money?
What are the factors on which the amount of excess reserves depends that a bank holds ?
Why there is a need for accounting and transparency for central bank?
The State Bank of Pakistan (SBP) is the Supreme Regulatory Authority of all the Banking System. The SBP has taken a number of proactive & forward looking steps to strengthen the prudential regulations and monitoring framework. According to the Annual Report of SBP (2005-06), till the End of March 2006,
The Outstanding Stock of Currency in the hands of public was 756,607 million rupees; the Demand Deposits with Scheduled Banks were 992,579 million rupees, Other Deposits with the SBP were 3570 million rupees, the Outstanding Stock of Time Deposits of Scheduled Banks was 1,305,430 million rupees, the Outstanding Stock of Resident Foreign Currency Deposits (RFCDs) was 190,033 million rupees.
Keeping in view all the above information, find the following:
(a) The total amount of Narrow Money (M1)
(b) The total amount of Broad Money (M2)
What is the effect of an increase in potential output on inflation and output?
Write down the relationship of portfolio demand for money with the items given below:
· Wealth
· Return relative to alternatives
· Expected future interest rates
Expected future interest rates
Briefly define three types of secrurity firms.
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