5. Which entities in the Federal Reserve System control the discount rate? Reserve requirements? Open mar- ket operations? 6. Do you think that the 14-year nonrenewable terms for governors effectively insulate the Board of Gover- nors from political pressure? 7. Compare the structure and independence of the Fed- eral Reserve System and the European System of Central Banks

5. Which entities in the Federal Reserve System control the discount rate? Reserve requirements? Open mar- ket operations? 6. Do you think that the 14-year nonrenewable terms for governors effectively insulate the Board of Gover- nors from political pressure? 7. Compare the structure and independence of the Fed- eral Reserve System and the European System of Central Banks

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Monetary System

Section: Chapter Questions

Problem 5PA

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Similar questions

Recognize thehistorical context ofthe development ofthe central bankingsystem
Why was the Federal Reserve System set up withtwelve regional Federal Reserve banks rather than onecentral bank, as done in other countries?
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 32Deposits 205Loans 150 Securities 53Other $X Using the balance sheet above, find the level of required reserves for this bank if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)
Assume we have a simplified banking system inbalance-sheet equilibrium. Also assume that allbanks are subject to a uniform 10 percent reserverequirement and demand deposits are the onlyform of money. A commercial bank receiving anew demand deposit of $100 would be able toextend new loans in the amount ofa. $10.b. $90.c. $100.d. $1,000.
7. Compare the structure and independence of the Fed- eral Reserve System and the European System of Central Banks.
1. You deposit $100 of currency into your account. Explain what happens to reserves , checkabledeposits, and monetary base? 2. Explain what the shadow banking system is and how it works. 3. Your bank has the following balance sheet:Assets LiabilitiesReserves $70 million Checkable deposits $200 millionSecurities $50 millionLoans $130 million Bank capital $50 millionIf the required reserve ratio is 10%, what actions should the bank manager take if there is anunexpected deposit outflow of $50 million? Explain your answer. 4. Explain and demonstrate graphically that if the central bank pursues targeting a monetaryaggregate, it is likely to lose control over the interest rate. 5. In the market for reserves, the federal funds rate is equal to the interest rate paid on excessreserves. Explain and demonstrate graphically the effect of an open market sale on the federalfunds rate.
3. The demand curve and supply curve for one-year discount bonds witha face value of $1,050 are represented by the following equations:Bd: P rice = −0.8 × Quantity + 1160Bs: P rice = Quantity + 720Suppose that, as a result of monetary policy actions, the FederalReserve sells 90 bonds that it holds. Assume that bond demand andmoney demand are held constant.a. How does the Federal Reserve policy affect the bond supply equation?b. Calculate the effect on the equilibrium interest rate in this market,as a result of the Federal Reserve action
You take $100 you had kept under your mattressand deposit it in your bank account. If this $100stays in the banking system as reserves and if bankshold reserves equal to 10 percent of deposits, byhow much does the total amount of deposits in thebanking system increase? By how much does themoney supply increase?
Your bank has the following balance sheet: Assets Liabilities Checkable Reserves $90 million $380 million deposits $130 Securities million Loans $200 million Bank capital $40 million If the required reserve ratio is 20%, what will be the size of this bank (as measured by its total assets or liabilities) after $20 million deposit outflow if it just meets reserve deficiency by taking out a discount loan from the Federal Reserve? $402 million $400 million. OOOO $420 million. $412 million.
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)
The bank you own has the following balance sheet Assets OA. You can go to the discount window. OB. You can call in or sell off loans. OC. You can borrow reserves in the federal funds market OD. Any of the above are appropriate actions to take Liabilities $75 million Reserves Loans Deposits Bank capital $525 million If the bank suffers a deposit outflow of $50 million with a required reserve ratio on deposits of 10%, what actions can you take to keep your bank from failing? $500 million $100 million
Question 1) Explain what will happen to M1 and M2 measures of money supply if an individual moves money from demand deposit account to a small-denomination time deposit. Question 2) Issuing marketable securities is the primary way businesses finance their operations. Trueor false? Explain your answer. If a four-year bond with a $2000 face value has a coupon rate of 2.5%, and the currentmarket interest rate is 4%, what is the market price of the bond? If this bond sold for $1900, is theyield to maturity greater or less than 4%? Why?