. If there is a recession, the Fed would most likely encourage banks to provide loans by: O buying government securities O raising the discount rate O raising the required reserve ratio O raising the federal funds rate selling government securities

. If there is a recession, the Fed would most likely encourage banks to provide loans by: O buying government securities O raising the discount rate O raising the required reserve ratio O raising the federal funds rate selling government securities

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter13: Money And The Banking System

Section: Chapter Questions

Problem 12CQ

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

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. If there is a recession, the Fed would most likely encourage
banks to provide loans by:
O buying government securities
O raising the discount rate
O raising the required reserve ratio
O raising the federal funds rate
selling government securities

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Which one of these tasks is a role that the Fed has? Select one: O a. Giving tax credits (reducing taxes) to people during recessions O b. Regulating prices on the New York Stocks Exchange O c. Depositing the money of the federal government O d. Regulating Hedge Funds Oc. O e. Issuing new government bonds