10. Suppose that a change in transaction technology reduces the amount of currency people want tohold relative to demand deposits. If the Fed does nothing, the money supply will tend tobonds in open-marketBut the Fed can hold the money supply constant byoperations.a. increase, buyingb. increase, sellingc. decrease, buyingd. decrease, selling11. Which of the following changes would contribute to a decline in the index of leading indicators,suggesting that a recession is more likely?a. a rise in stock pricesb. a rise in building permitsc. a decline in initial claims for unemployment insuranced. a decline in the slope of the yield curve12.Stagflation-lower output and higher prices-is caused bya. an expansion in aggregate demand.b. a contraction in aggregate demand.c. a favorable shock to aggregate supply.d. an adverse shock to aggregate supply.

The money supply refers to the total amount of money available within an economy at a given point in…

10. Suppose that a change in transaction technology reduces the amount of currency people want to hold relative to demand deposits. If the Fed does nothing, the money supply will tend to bonds in open-market But the Fed can hold the money supply constant by operations. a. increase, buying b. increase, selling c. decrease, buying d. decrease, selling

10. Suppose that a change in transaction technology reduces the amount of currency people want to hold relative to demand deposits. If the Fed does nothing, the money supply will tend to bonds in open-market But the Fed can hold the money supply constant by operations. a. increase, buying b. increase, selling c. decrease, buying d. decrease, selling

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. The original interest rate is at 2%. Suppose the central bank decreased the money supply. Which of the following new interest rate is possible due to the change in the level of money supply? a. 1.5% b. 1.0% C. 4.0%
Jamie made a cash deposit to her checking account. This resulted in an increase in the money supply of $23,000. The reserve requirement is 4%, and all banks keep excess reserves equal to 4% of checking deposits. What was the amount of Jamie's deposit? A. $1.840 B. $2,000 C. $920 D. $1,000
6. An economy is facing a recessionary gap and the Federal Reserve decides to engage in expansionary monetary policy. What are the three tools that the Federal Reserve can use to get the money supply to grow and what direction should each take?
12
Which of the following will not increase the money supply? 1, The RBA purchasing bonds from private banks. 2, The federal government spending its currency. 3, The RBA purchasing bonds from non-bank private sector. 4, Banks lending to their customers. 5, Government bonds owned by private households reacjing maturity.
1. Which do you think would be more harmful to the economy—an inflation rate that averages 5 percent a year that has a high standard deviation or an inflation rate of 7 percent that has a standard deviation close to zero? 2. Suppose a major bank needs to borrow $20 billion overnight that it cannot obtain from private creditors. The Fed is willing to make a discount loan of $20 billion provided that it will not alter the aggregate supply of reserves to the banking system. How can it do so?
I’m confused on all three please help!
20. Assuming that prices of various consumer goods increase in the country. This event will _____________ and cause the interest rates in the money market to ___________. A. increase the supply of money; fall B.decrease the supply of money; rise C. increase the demand for money; fall D. increase the demand for money; rise
The Central Bank requires banks to maintain a 10% legal minimum reserve requirement of their deposits, banks lend out all their excess reserves, and deposits stay within banking institutions and are not withdrawn into currency circulation. When Terry received a cash gift of $20,000 that she deposited into her checkable deposit account, what was the full effect on money supply M1? A. increased by $2,000 B. increased by $20,000 C. increased by $200,000 D. cannot be determined E. no change in M1
2. What is the relationship between money demand and interest rates? What happens when the interest rate reaches the zero lower bound?
Suppose the Fed is holding $35 billion in mortgage-backed and other securities and $65 billion in U.S. Treasury securities. Reserves are $60 billion and currency is $40 billion. Calculate the monetary base. A. $125 billion B. $200 billion C. $100 billion D. $135 billion
2. Problems and Applications Q2 If the Fed wants to increase the money supply, it can If the Fed wants to decrease the money supply, it can If the Fed wants to increase the money supply, it can bonds in open-market operations. the reserve requirement. the interest rate it pays on reserves. When the FOMC decreases its target for the federal funds rate, the money supply will If people decide to hold less currency after a rash of pickpocketing, the money supply