FDNECON 03 · Money and Monetary Policy
Conventions
Original source-based practice for FDNECON Quiz #2. Questions are independent: use only each item’s complete givens. Amounts and units are stated in every numerical case. Numeric written answers omit currency symbols and units; rates are entered as numerical percentages (5 means 5%). Round only the final result to two decimals unless instructed otherwise. The course money-market diagram treats supply as vertical and policy-determined, with downward-sloping demand and other determinants fixed. Numerical money-demand equations, finite/infinite spending chains, gap percentages and multiplier/tax formulas are fully stated hypothetical practice extensions, not claims about measured Philippine outcomes or guaranteed policy effects. Expenditure and income approaches remain separate; foreign-income boundary inconsistencies in the source are explained in the reviewer. No question requires an unprovided graphic or another item’s answer.
Questions
01Enter equilibrium interest rate as a numerical percentage.
Problem
Hypothetical money demand Md=1,080−30r and supply Ms=900, with money in ₱bn. r=6 means 6%. Enter only the numerical percentage.
02Enter the new equilibrium interest rate as a numerical percentage.
Problem
Md=1,080−30r, money in ₱bn; r=3 means 3%. Supply rises from 900 to 990 while demand is unchanged. Find the equilibrium after the change.
03Enter excess money demand in ₱ billion; use a negative value for excess supply.
Problem
Md=1,080−30r and Ms=900, both in ₱bn. r is a percentage number. Evaluate excess demand at r=4%. Use Md−Ms.
04Complete required reserves in ₱ million.
| Item | Value |
|---|---|
| Deposit base (₱ million) | 700 |
| Reserve ratio (%) | 12 |
| Required reserves (₱ million) | ? |
05Enter the increase in required reserves in ₱ million.
Problem
A bank’s fixed deposit base is ₱700m. Required reserve ratio rises from 10% to 12%. Calculate only the change in required reserves.
06Identify the money function emphasized.
Problem
A menu shows every meal price in pesos, allowing customers to compare value before paying. Identify the function highlighted by the price comparison.
07Identify the monetary-policy direction.
Problem
In the introductory OMO model, the central bank sells government securities and receives funds from banks, withdrawing those funds from circulation. Money demand is unchanged.
08Enter the extra annual simple interest in pesos.
Problem
Compare one-year simple interest on a fixed ₱70,000 principal at 6% and at 9%. Ignore fees and compounding; calculate the increase, not the new total.
09Enter the percentage loss of purchasing power in identical baskets.
Problem
Cash stays ₱1,200. An identical basket’s price rises from ₱150 to ₱187.50. Measure purchasing power in baskets and enter the positive percentage loss.
10Does money demand shift left or right?
Problem
Real GDP and transaction volume rise. The money-demand relationship is compared at every interest rate, and other demand determinants are unchanged. Enter the shift direction.