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- Due to the huge inflow of money to Spain, price levels have begun to increase. The government worries that this huge money supply will be an economic problem soon. Which of these monetary policies will work to solve this problem? a. Increase cash reserve ratio, increase interest rates and buy government bonds b. Decrease cash reserve ratio, decrease interest rates and sell government bonds c. Decrease cash reserve ratio, increase interest rates and sell government bonds d. Increase cash reserve ratio, increase interest rates and sell government bondsWhich of the following is included in the narrowest definition of the money supply? Currency in circulation. Transactions account balances. Traveler's checks. All of the above.Open market operations mean that the Fed is buying\selling government securities. This means that if the Fed wants to increase the money supply, it should ⒸBuy bonds. Sell bonds. Decrease taxes. Decrease government spending QUESTION 7 Consider the market for automobiles. Suppose consumer income decreases dramatically while simultaneously there is global shutdown that increases the cost of producing automobiles. In this situation we would expect, Price of automobiles to fall and the quantity sold to increase. O Price of automobiles to either increase or decrease and the quantity sold to fall. Price of automobiles to fall and the quantity sold to either increase or decrease. None of the above QUESTION 8 Which of the following is an example of an automatic stabilizer? O Increases in the interest rate. Unemployment insurance and welfare. O Automatically varying reserve requirements that differ by Federal Reserve Bank Region B and C.
- In the long-run, money market equilibrium determines the value of money. the nominal interest rate. velocity. real GDP. the real interest rate. Which of the following is a tool the Federal Reserve System can use to regulate the quantity of money? i. changing the discount rate ii. conducting open market operations iii. changing the required reserve ratio i only ii only ii and iii i and ii i, ii, and iii1)What is fiat money? What is commodity money? Which kind do we use? 2)Explain whether each of the following events increases or decreases the money supply. a). The State Bank of Pakistan sells bonds in open-market operations. b). The State Bank of Pakistan increases the reserve requirement. c).The State Bank of Pakistan reduces the interest rate it pays on reserves. d). MCB Bank repays a loan it had previously taken from the State Bank of Pakistan. e). After a rash of pickpocketing, people decide to hold less currency. f). Fearful of bank runs, bankers decide to hold more excess reserves.A central bank can increase the money supply by: Select one: a. changing the quantities of required and excess reserves by altering the legal reserve ratio. b. changing the discount rate so as to encourage or discourage commercial banks in borrowing from the central banks. c. changing the bank reserves through the sale or purchase of government securities. d. reducing the discount rate to reduce the cost of borrowing from the central bank.
- The central bank (CB) decided to increase the discount rate on loans it makes to commercial banks. This results in: Select one: a. Decrease the value of local currency b. None of the answers are correct c. Increase in reserve ratio d. Decrease of the quantity of local currency e. Increase of the quantity of local currencyWhich of the following sets the reserve requirement ratio? a, commercial banks b. Bureau of Treasury c. Bangko Sentral ng Pilipinas d. noneIf a society chooses fiat money as its money form, it __________.Group of answer choices A. will need to make sure the currency is convertible into gold B. must make sure there is an illiquid money supply C. should estimate any central bank D. must be particularly vigilant about controlling the quantity of money
- Which of the following is not a function of the central bank? Select one: a. The issuance of bank notes and coins for the country b. Manage foreign exchange c. It acts as the Government’s bank d. Stimulate the economy through government spendingThe table shows the commercial banks' balance sheet (aggregated over all the banks). The commercial banks' desired reserve ratio on all deposits is 10 percent and there is no currency drain. Calculate the bank's excess reserves. >>> Answer to 2 decimal places. The banks' excess reserves are $11 million. If the banks use all of these excess reserves to make loans, what is the quantity of loans? The quantity of loans will be $11 million. If the banks use all of the excess reserves to make loans, what is the quantity of total deposits immediately after the banks have made the loans? The quantity of total deposits immediately after the banks have made the loans is $ ☐ million. Assets Liabilities (millions of dollars) Reserves at the Fed 25 Checkable deposits 120 Cash in vault Securities Loans 5 Savings deposits 70 40 120In the economy of Nocoin the banks have deposits of $300 billion. Their reserves are $36 billion, two thirds of which is in deposits with the central bank. Households and firms hold $24 billion in bank notes (dollar bills). There are no coins! Calculate the monetary base and the quantity of money. Calculate the banks' desired reserve ratio and the currency drain ratio (as percentages). The monetary base is $ billion. The quantity of money is $ billion. The banks' desired reserve ratio is percent. The currency drain ratio is percent
