EC290 Lecture Notes - Lecture 11: Liquidity Trap, Reserve Requirement, Monetary Base

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29 Nov 2017
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Compare three aspects of the great depression and the 2009 recession in canada: The behaviour of the price level and inflation. The size and duration of the decline in output. The size of the increase in the unemployment rate and its duration. Suppose that 1/3 of the loans issued by this bank stop paying interest. Now suppose this bank takes on m more in loans and m more in deposits. Suppose that 1/3 of the total of m in loans issued by this bank now stop paying interest. To analyze a banking system in a financial crisis requires we understand bank balance sheets a bit better. A group of people start a bank with m in equity. This is the bank we looked at before except: This bank now adds to its balance sheet m in collateralized debt obligations (cdos) or.

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