Consider the recurring spending and earning experience of Patrick: Monday throug
ID: 1208734 • Letter: C
Question
Consider the recurring spending and earning experience of Patrick: Monday through Saturday, he buys only beer at Jed's, at dollar 1.00/bottle (he, like Professor Driskill, receives the "good-looking-guv" discount). He buys 7 bottles on Monday evening, 6 on Tuesday evening, 5 on Wednesday evening, 4 on Thursday evening, 3 on Friday evening, 2 on Saturday evening, and 1 on Sunday evening. Patrick earns money bv writing essays. He gets dollar 1/essay, and he writes 1 essay on Monday morning, 2 on Tuesday morning, 3 on Wednesday morning, 4 on Thursday morning, 5 on Friday morning, 6, on Saturday morning, and 7 on Sunday morning. To carry out his planned expenditures each week, on each Monday Patrick needs how much money in his possession? dollar 28. dollar 12. dollar 6. dollar 10. Re-consider Patrick's earnings-expenditure problem from the preceding question if all prices in his world increase by 100 percent, i.e., if he now earns dollar 2/essay and pays dollar 2/beer. To carry out his planned expenditures each week, he would need in his possession on eacli Monday dollar 20. dollar 18. dollar 24. dollar 12. Commercial hanks Have short-maturity assets and long-maturity liabilities Hold reserves only because the Fed requires it of them. Are required to make loans equal to 95 percent of the level of their demand deposits. Hold excess reserves because of the risk of unexpected net with-drawals.Explanation / Answer
25. (c) $6
26. (d) $12
27.(d) hold excess reserves because of the risk of unexpected net withdrawals.