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Assignments for Macroeconomics Chapter 12

Assignment #1: Prove that money is created when banks issue loans. Go through
daily operations of banks and confirm your proof.

Assignment #2: Explain why the monetary multiplier takes place. Give formula.
Comment about its size.

Assignment #3: Show the key role of bank's excess reserves for money creation.
Conclude with an indication on how to control money supply.

Assignment #4: Explain open market operations. Show why this is the most
popular tool for control of money supply. List minor tools.

Assignment #5: List and explain the various shortcomings of monetary policy.
Conclude with the policy dilemma. (Use historical examples).