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04. Given a reserve requirement ratio of 20%, what will be the maximum effect on money supply of a Federal Reserve purchase of $100,000 worth of government securities from a bank? O a) an increase of $100,000 Ob) a decrease of $1,000,000 Oc) an increase of $20,000,000 O d) an increase of $500,000 Oe) an increase of $1,000,000

04. Given a reserve requirement ratio of 20%, what will be the maximum effect on money supply of a Federal Reserve purchase of $100,000 worth of government securities from a bank? O a) an increase of $100,000 Ob) a decrease of $1,000,000 Oc) an increase of $20,000,000 O d) an increase of $500,000 Oe) an increase of $1,000,000

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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### Question 4 **04. Given a reserve requirement ratio of 20%, what will be the maximum effect on money supply of a Federal Reserve purchase of $100,000 worth of government securities from a bank?** - a) an increase of $100,000 - b) a decrease of $1,000,000 - c) an increase of $20,000,000 - d) an increase of $500,000 - e) an increase of $1,000,000 --- ### Question 5 **05. When the Federal Reserve Bank wants to increase the money supply, it** - a) sells government securities - b) increases taxes - c) buys government securities - d) decreases taxes - e) tells private banks to increase lending --- ### Question 6 **06. When the Federal Reserve Bank wants to reduce the money supply, it** - a) sells government securities - b) increases taxes - c) buys government securities - d) decreases taxes - e) lends money to banks ---
Transcribed Image Text:### Question 4 **04. Given a reserve requirement ratio of 20%, what will be the maximum effect on money supply of a Federal Reserve purchase of $100,000 worth of government securities from a bank?** - a) an increase of $100,000 - b) a decrease of $1,000,000 - c) an increase of $20,000,000 - d) an increase of $500,000 - e) an increase of $1,000,000 --- ### Question 5 **05. When the Federal Reserve Bank wants to increase the money supply, it** - a) sells government securities - b) increases taxes - c) buys government securities - d) decreases taxes - e) tells private banks to increase lending --- ### Question 6 **06. When the Federal Reserve Bank wants to reduce the money supply, it** - a) sells government securities - b) increases taxes - c) buys government securities - d) decreases taxes - e) lends money to banks ---
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