Assignment:
1) McLeay, M., Radia, A., & Thomas, R. (2014). Money creation in the modern economy. Quarterly 683 Bulletin. Bank of England, London, pp. 14-27.
Complete the following sentence from the above article. " Banks first decide how much to lend depending .........
2) In the long run, what is going to happen to the price level when the monetary base increases and the economy is at full capacity?
3) Show with the help of a graph of the money market what happens to the interest rate as a result of the increase in the monetary base by the Central Bank. (No actual numbers needed)
4) What is going to happen to the equilibrium interest rate and equilibrium loanable funds level, when there is a decrease in expected future income?