Problem
1. Why might giving the central bank responsibility for banking supervision make it more difficult for the bank to pursue an independent monetary policy with price stability as the primary target?
2. Explain how capital adequacy requirements impose a tax on banking.
3. Why might the presence of capital risk aversion in the bond market make the conduct of monetary policy more difficult?
4. Why does a rise in money's own interest rate, ceteris paribus, tend to increase the rate of monetary growth?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.