Question 1a Question 1b Question 1c) 1d) 1e Question 2 a) $2.0288 b) $90 c 51 Question 3 Japan – Labor Force = 66,010 Unemployment Rate = 5.30Labor Force – Participation Rate = 60.30 France – Adult population = 46,804 Employed = 24,293 Unemployment rate = 9.59 Germany – Employed = 35,930 Unemployed = 3,661 Labor-Force Participation Rate = 56.43% Question 4 Answer) In economics, there is a very thin line between Investment and Saving. Investment is when you put your money in a business, or stocks, hoping that you will get a higher return while saving is when you reduce your current consumption of things, and save it for future purposes. Situation ‘b’ describes investment in the best possible way as you are taking out money for investment purposes (buying stocks) from your bank account that you had deposited earlier.
Situation ‘c’ describes saving in the best possible manner as you are depositing money the money you are earning in your bank account, for saving purposes. Question 5a) The long term effects of this regulation would be that there would be no, or very less demand for loans, thus the demand for money and investments would go down, and as a result of that, the interest rates will fall as well.
Question 5b The long term effect on the economy of this regular would be that there would be more money available to be borrowed for investments as a result of the savings done by the people in the past because of higher interest rates. Question 6 Answer) The formula used for money creation is 1 / Reserve Ratio.
So, if we put 20% (0.2) in place of Reserve ratio, the answer would come out to be (100 * / 0.2 = 500). The money created from $100 at a reserve ratio of 20% would be $500. Question 7 Answer) Firstly, The Fed does not have control over the amount of reserves that banks want to keep, or already has. So when the banks do not lend from their reserves, the money supply is bound to decrease in the economy. Secondly, the Fed does not have control over the amount of money that businesses or households have in reserves.
So if businesses or households decide to keep more money with themselves and less in their bank accounts, this could a problem as banks would have lesser money to lend, thus the money supply will decrease In the economy. Question 8 Question 9 a) Real output b) Real wages