ECS3701 Assignment 2 (DETAILED ANSWERS) Semester 2 2024 - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED - DISTINCTION GUARANTEED Answers, guidelines, workings and references ..2.01 Discuss how collateral and indirect finance are used in explaining the basic facts about financial structure around the world. [10] 2.02 The two ways in which government can finance its deficit is through monetizing the debt and printing money. Explain each of these two ways in detail and what happens to monetary base and money supply. [15] 2.03 “The independence of the Reserve Bank means that it is unlikely to focus on the long term objectives but seeking short-run solutions.” Is this statement true, false, or uncertain? Explain your answer. [10] 2.04 There is a single, precise definition of money or money supply. Is this statement true, false or uncertain? Support your answer. [5] Open Rubric 2.05 Write down the money multiplier, m. Explain each of the variables that determine the money multiplier and state who set each of the variables.
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