1. While cleaning your apartment, you lookunder the sofa cushion and find a $100 billand half a taco. You deposit the bill in yourchecking account. If the reserve ratio is 10percent, then $100 can create up to(Assume that banks keep exactly the amountrequired in reserves and lend out the rest.)a. $500 of new moneyb. $1,000 of new moneyc. $400 of new moneyd. $900 of new money2. After the FOMC meeting, the Fed decidesto raise the discount rate. As a result, bankswould borrowa. more from the Fed so money supplyincreasesb. less from the Fed so money supplydecreasesc. more from the Fed so money supplydecreasesd. less from the Fed so money supplyincreases3. The Fed Funds Rate is the interest rate thatbanks charge one another when they lendreserves. If the Fed Funds Rate is below thelevel the Fed targeted, the Fed can move therate up towards its target bya. purchasing government bonds. Thispurchase would increase bank reservesb. selling government bonds. This sale woulddecrease bank reservesc. purchasing government bonds. Thispurchase would decrease bank reservesd. selling government bonds. This sale wouldincrease bank reserves

1. While cleaning your apartment, you look under the sofa cushion and find a $100 bill and half a taco. You deposit the bill in your checking account. If the reserve ratio is 10 percent, then $100 can create up to (Assume that banks keep exactly the amount required in reserves and lend out the rest.)

1. While cleaning your apartment, you look under the sofa cushion and find a $100 bill and half a taco. You deposit the bill in your checking account. If the reserve ratio is 10 percent, then $100 can create up to (Assume that banks keep exactly the amount required in reserves and lend out the rest.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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