Principles Of Macroeconomic Assignment | College Homework Help

Week 6

Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper

Start by reading and following these instructions:

1. Quickly skim the questions or assignment below and the assignment rubric to help you focus.College Homework Help

2. Read the required chapter(s) of the textbook and any additional recommended resources. Some answers may require you to do additional research on the Internet or in other reference sources. Choose your sources carefully.

3. Consider the discussion and the any insights you gained from it.

Save Time On Research and Writing
Hire a Pro to Write You a 100% Plagiarism-Free Paper.
Get My Paper

4. Create your Assignment submission and be sure to cite your sources, use APA style as required, check your spelling.


1. Between the early 1960s and late 2000s, bankers sought to raise and lend out more deposit funds. Today, however, a number of banks have stopped trying to attract more deposits. A few are even actively discouraging deposits by charging customers fees if they deposit “too many” funds. Why have bankers’ views about the desirability of increased deposits shifted so dramatically in recent years?

Low Returns on LendingCollege Homework Help

One key reason that banks have soured on deposits is that earnings they can anticipate from lending deposit funds are now very low. In today’s dampened U.S. economy, many fewer households and firms are seeking credit than in years past. As a consequence, banks have been competing with one another for a dwindling set of borrowers, and they have bid market interest rates on bank loans downward.

Thus, existing deposits are now yielding lower returns for banks. This fact gives them less incentive to seek out more deposits from current or new customers.

Higher Deposit Insurance Premium

Even as banks’ returns from lending deposit funds have dropped, the costs they must pay for deposits have increased. Since 2006, the premium rate that banks must pay the Federal Deposit Insurance Corporation has jumped from close to zero to more than $0.30 per $100 of insured deposits—the highest rate since the FDIC’s establishment in 1933.

The net result? Some banks have begun actively discouraging customers from substantially increasing their deposits. Recently, for instance, the Bank of New York Mellon began charging large depositors for the privilege of holding federally insured deposits. The bank now charges an annual interest fee of 0.13 percent to customers with deposit accounts of $50 million or more. Unless market loan rates rise and deposit insurance premiums fall, it appears likely that other banks will follow suit. Some banking experts speculate that eventually banks might begin charging interest fees to customers with small deposits.

a. Why do you suppose that the market clearing interest rates on bank savings and time deposits have fallen as the interest rates on bank loans have dropped?

b. If interest rates earned by banks on their assets fell close to zero, why might all bank customers have to pay interest fees on deposits they hold with banks?


To take a look at the latest statistics on the status and performance of U.S. commercial banks, go to

For a look at historical U.S. commercial banking data, go to

2. During the late 1970s, prices quoted in terms of the Israeli currency, the shekel, rose so fast that grocery stores listed their prices in terms of the U.S. dollar and provided customers with dollar shekel conversion tables that they updated daily. Although people continued to buy goods and services and make loans using shekels, many Israeli citizens converted shekels to dollars to avoid a reduction in their wealth due to inflation. In what way did the U.S. dollar function as money in Israel during this period?College Homework Help

3. Let’s denote the price of a nonmaturing bond (called a consol) as Pb. The equation that indicates this price is Pb = I/r, where I is the annual net income the bond generates and r is the nominal market interest rate.

a. Suppose that a bond promises the holder $500 per year forever. If the nominal market interest rate is 5 percent, what is the bond’s current price?

b. What happens to the bond’s price if the market interest rate rises to 10 percent?

c. Imagine that initially the market interest rate is 5 percent and at this interest rate you have decided to hold half of your financial wealth as bonds and half as holdings of non-interest-bearing money. You notice that the market interest rate is starting to rise, however, and you become convinced that it will ultimately rise to 10 percent.

d. In what direction do you expect the value of your bond holdings to go when the interest rate rises?

e. If you wish to prevent the value of your financial wealth from declining in the future, how should you adjust the way you split your wealth between bonds and money? What does this imply about the demand for money?

4. Consider the following data: The money supply is $1 trillion, the price level equals 2, and real GDP is $5 trillion in base-year dollars. What is the income velocity of money? Suppose that the money supply increases by $100 billion and real GDP and the income velocity remain unchanged.

a. According to the quantity theory of money and prices, what is the new equilibrium price level after full adjustment to the increase in the money supply?

b. What is the percentage increase in the money supply?

c. What is the percentage change in the price level?

d. How do the percentage changes in the money supply Get Business and Finance homework help today

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Homework Writing Services
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Customer 453413, April 29th, 2020
Thank you.
Customer 463363, September 23rd, 2022
Very good job! I really appreciate the work and effort you've done. it helped me a lot. the feedback has been followed one by one and I appreciate that! I will assign you for future work, and I will be sending a tip soon!
Customer 462787, August 1st, 2022
Well-researched content.
Customer 463473, October 25th, 2022
Health Care
Thank you very much!
Customer 454001, February 8th, 2020
Social Work and Human Services
All of the papers I have so far received have me extremely satisfied. The content that is asked for each task is written by the writers in great detail, and they perform a fantastic job of it. I'll keep using the service and tell other people about it. Again, many thanks.
Customer 463411, January 29th, 2023
great job, thanks
Customer 462485, March 18th, 2022
English 101
She did an excellent job on my revision
Customer 464103, April 24th, 2023
The paper was delivered on time but I requested for a revision. Overall, it was on time and satisfied with the provided 2 versions of the revised paper. Thank you!
Customer 454455, June 7th, 2020
Customer 456821, June 11th, 2022
Business and administrative studies
The paper met the expectation. Thanks!
Customer 463143, September 7th, 2022
Good job. Few edits made
Customer 463245, November 16th, 2022
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat