9. In order to reduce the money supply, a central bank can: A. raise the reserve requirement. B. buy bonds in open marketoperations. C. lower the discount rate. D. engage in quantitative easing.

The question is asking about the methods a central bank can use to reduce the money supply in the…

Answered: 9. In order to reduce the money supply,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
To counteract a recession, the Central Bank should A. raise the reserve requirement and the discount rate B. sell securities on the open market and raise the discount rate C. sell securities on the open market and lower the discount rate D. buy securities on the open market and lower the discount rate
Federal funds are:a. funds raised by the federal government in the bond market.b. loans made by the Federal Reserve System to banks.c. loans made by banks to the Federal Reserve System.d. loans between banks of their deposits at the Federal Reserve System
When the Fed increases the required reserve ratio, a bank's ______________, ceteris paribus. a. excess reserves are increased b. required reserves are unaffected c. required reserves are decreased d. required reserves are increased
7. The four major instruments (or tools) of monetary policy are: 1) Open market operations 2) The Discount Rate 3) The reserve ratio 4) Interest on Reserves The Fed uses four major tools to control the reserves of banks and the size of the money supply. 1) The Federal Reserve can buy or sell government securities in the open market to change the lending ability of the banking system: (a) buying government securities in the open market from either banks or the public ( increases, decreases ) the excess reserves of banks; (b) selling government securities in the open market to either banks or the public ( increases, decreases ) the excess reserves of banks. 2) The Fed can raise or lower the reserve ratio: (a) raising the reserve ratio ( increases, decreases ) the excess reserves of banks and the size of the monetary (checkable-deposit) multiplier; (b) lowering the reserve ratio (increases, decreases) the excess reserves of banks and the size of the monetary multiplier. 3) The Fed can…
Which statement(s) is/are TRUE? I. Increasing the reserve requirement would decrease the money supply. II. Decreasing the discount rate would decrease the money supply. III. Buying government bonds would increase the money supply. II only III only I and III only I and II only
Establishing upper and lower limits for the federal funds rate enabled the Fed to A. buy financial assets to make ample reserves available. B. sell financial assets to limited the reserves available. C. buy financial assets to limited the reserves available. D. sell financial assets to make ample reserves available.
What would be the immediate effect if the central bank increases the cash reserve ratio? a. It reduces the cash reserve with the commercial banks. b. It increases the cash reserves with the commercial banks. c. There is no change in the amount of cash reserve at the commercial banks. d. It increases the borrowings of commercial banks.
With respect to controlling the money supply,the law requires the Fed to take orders from a)the president. b)the Speaker of the House. c.the Secretary of the Treasury. d.no one-the Fed is an independent agency.
14. Which of the following is the main goal of contractionary monetary policy? a.An increase in the money supply b.An increase in spending c.An increase in aggregate demand d.A decrease in the money supply
10. The interest rate that the Fed charges banks that borrow reserves from it is the a. prime rate. b. reserve requirement. c. federal funds rate. d. discount rate.

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9. In order to reduce the money supply, a central bank can: A. raise the reserve requirement. B. buy bonds in open market operations. C. lower the discount rate. D. engage in quantitative easing.