QuestionQuestion

1.) Go to the international monetary fund’s financial crises page. Report on the most recent three countries that the IMF has given emergency loans to in response to a financial crises. According to the IMF,what caused the crises in each country?

At the same site monetary policy to find the beige book. According to the summary of the most recently published book, is the economy weakening or strengthening?

2.) Consider a bank policy to maintain 12% of deposits as reserves. The bank currently has $ 10 million in deposits and holds $400,000 in excess reserves. What is the required reserve on a new deposit of $ 50,000?

3.) The federal reserve wants to increase the supply of reserves so it purchases 1 million dollars worth of bonds from the public. Show the effect of this open market operation using T –Accounts.

4.) The short term nominal interest rate is 5% with an expected inflation of 2% Economists forecast that next year’s nominal rate will increase by 100 basis points, but inflation will fall to 1.5%.What is the expected change in real interest rates?

5.) A bank desk at the Federal Reserve sold $ 100,000,000 in T-bills to the public. If the current reserve requirement is 8.0%,how much could the money supply change?

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1) Go to the international monetary fund’s financial crises page. Report on the most recent three countries that the IMF has given emergency loans to in response to a financial crises. According to the IMF,what caused the crises in each country?

Linking from the url above and according to data,
as of December 2014, the three most recent lending arrangements were made to
1) Honduras on Dec 3, 2014
2) Mexico on November 26, 2014; and
3) Chad on August 1, 2014.
The reasons are as follows:

Honduras
“Sustained fiscal consolidation will be necessary to reduce the country’s large fiscal deficit and contain public debt. The authorities began moving in this direction with the implementation of tax policy measures earlier this year, followed by expenditure reductions and steps to improve the financial position of the state electricity company. Looking forward, efforts should focus on further reducing current expenditure, improving tax administration, and strengthening the electricity company’s finances. ..”

Mexico
"The country’s close ties with the global economy are a testament to the economy’s strength but heighten the economy’s exposure to external risks. An abrupt surge in global financial market volatility could lead to a reversal of capital flows to emerging markets, including to Mexico. The authorities are committed to adopting appropriate measures to deal with any shock. The successor arrangement under the Flexible Credit Line (FCL), which the authorities intend to treat as precautionary, will continue to play an important role in supporting the authorities’ macroeconomic strategy by providing insurance against global downside risks and bolstering market confidence.”

Chad
“The new ECF arrangement is expected to address the country’s protracted balance of payments’ problems—which resulted from a reduction in oil revenues, maintain adequate international reserves’ coverage, and play a catalytic role for bilateral and multilateral assistance.”...
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