a) The Bangladesh Bank has formed a refinancing fund of Tk25,000 crore to support banks in...

a) The Bangladesh Bank has formed a refinancing fund of Tk25,000 crore to support banks in
executing two stimulus packages of Tk50,000 crore, announced by the government for large and
small industries
What are the two problems the Central Bank will face when they decide which banks and
industries to give the loans to? Given the urgency of the current crisis, do you think the Central
Bank will be able to do the due diligence of making the right choice (checking credit scores,
asking for balance sheets, etc) to avoid these two problems?

b) According to Monetarism, when does an increase in money supply change both Real GDP and
price level? In the short run or in the long run? Explain your answer using a diagram.

c) According to Monetarism, when does an increase in money supply change only price level and
not Real GDP? In the short run or in the long run? Explain your answer using a diagram.

Please write question number before starting. Thanks.

Expert Solution

Rahul Sunny answered 2 years ago

The Bangladesh Bank has formed a refinancing fund of Tk25,000 crore to support banks in executing...

The Bangladesh Bank has formed a refinancing fund of Tk25,000 crore to support banks in executing two stimulus packages of Tk50,000 crore, announced by the government for large and small industries.). Question: What are the two problems the Central Bank will face when they decide which banks and industries to give the loans to? Given the urgency of the current crisis, do you think the Central Bank will be able to do the due diligence of making the right choice...

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