f the Fed decreases the federal funds rate and/or the discount rate, the money supply does what?   A. It increases. B. It decreases. C. It remains unchanged as the federal funds rate has no impact on the money supply.

Q: When the Fed wants to expand the money supply, it   a. sells government securities.   b. buys…

A: Monetary policy is a macroeconomic policy that is implemented by the monetary authorities in order…

Q: Assume that the reserve requirement is 20 percent.Also assume that banks do not hold excess…

A: The Federal Reserve is the monetary authority of the USA, tasked with the responsibility of…

Q: d) Taxes decrease and at the same time the Fed increases the RRR

A: d. Taxes decrease and at the same time FED increases the RRR Primarily as a result of their…

Q: " the Fed wanted to use a/1 of its policy tools to decrease the money supply, what would it do?

A: Fed has various instruments to decrease money supply.  1. Increase in interest rates makes it…

Q: O a. sets the Discount Rate b. sets the requirement for purchasing equities c. sets margin…

A: Central bank refers to the institution that uses its monetary policy to maintain economic stability…

Q: Ther Fed creates a lower and upper bound for the federal funds rate and the incentives that drive…

A: This can be described as the central authority of the banking system of that particular nation. The…

Q: Holding money demand constant, if the Fed pursues loosemoney and increase money supply, which will…

A: Loose monetary policy refers to expansionary monetary policy, which is used with the aim to increase…

Q: The three traditional tools the Fed can use to control the interest rate via changing the money…

A: The fed is the central bank of United States that uses the monetary policy for stabilizing the…

Q: Consider the economy described in question 2. If the Fed sells $50 of government bonds than money…

A: The money supply can be defined as a measurement of the total amount of money in circulation.  The…

Q: When the Fed fights inflation, A. decrease in the supply of loanable funds raises the long-term…

A: The Federal Reserve (Fed) is the central banking system of the United States. Its primary role is to…

Q: 25. The Fed has in recent years set monetary policy by choosing a target for the federal funds rate,…

A: When talking about monetary policy, there are different ways to influence money supply in the market…

Q: If the Fed decides to leave the federal funds rate target range unchanged, we would expect _______.…

A: Commercial banks overnight lend and borrow from one another at the federal funds rate, which is the…

Q: 1 .Money demand decreases when the Federal Reserve Bank increases the Federal Reserve discount rate.…

A: Money is a mode of exchange, a unit of account, a store of significant worth, and a standard of…

Q: When the Fed buys government bonds, the money supply increases and the federal funds rate increases.…

A: The central bank of the US economy is the monetary authority which is the authorized monetary…

Q: To fight a recession, the Fed might: a. increase the reserve requirement and the discount rate b.…

A: Recession is a period of decreasing economic activity, that is falling GDP

Q: What is the likely effect of a central bank engaging in open market operations to sell government…

A: The issue is to recognize the reasonable impact of a national bank's open market tasks, explicitly…

Q: When the Fed conducts an open market purchase, the Fed buys securities from banks and the money…

A: Open market operations refer to purchase and sale of securities by Fed, central bank to regulate…

Q: Select the correct choice and correct match. A. increasing or decreasing the money supply B. people…

A: Money supply:Money supply refers to the supply of money in the economy at a  given point in timeIt…

Q: If the Fed increases the monetary base, the a. federal funds rate rises. b. federal funds rate…

A: In the United States, Federal Reserve can use monetary policy to influence the monetary base in the…

Q: What are some of the new stimulative monetary policy tools that the Fed used during the 2007-2009…

A: The Federal Reserve, or the Fed, is the central banking system of the United States. It uses various…

Q: If the Fed buys a U.S. government bond from a member of the public, A. the banking system has more…

A: Fed, central bank practices open market operations to buy and sell bonds to affect money supply in…

Q: opic 1. Suppose you read in the news paper that all last week the Fed conducted open market sale and…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: When the Fed conducts open-market purchases, a. it buys Treasury securities, which decreases the…

A: ANS C) it buys Treasury securities, which increases the money supply

Q: The economy's unemployment rate is 2% and the inflation rate is 18%. The most appropriate policy for…

A: As we know that Phillips curve shows the relationship between inflation and Unemployment rate . And…

Q: The Fed's monetary policy strategy that focuses on achieving price stability is known as: A. Money…

A: Monetary policy strategies focus on achieving  macroeconomic stability through price stability,…

Q: the Fed believes that the quantity of money should

A: The central can achieve its monetary policy goals in either of two ways: targeting the quantity of…

Q: In April 2022 theFederal Reserve boosted its target for the Federal funds rate for the first time in…

A: Central banks oversee a nation's currency circulation, execute monetary strategies, and monitor…

Q: Economics If the Fed increases the monetary base by $73 million and the money multiplier is 1.6,…

A: The money supply refers to the circulation of money in the economy wherein the economy needs funds…

Q: When the Fed lowers the federal funds rate target and buys bonds, what happens to short-term…

A: Fed uses federal funds rate and open market operations to influence the monetary base in the economy…

Q: P offering rate, and discount rate).   b. raise the target range for the federal funds rate and…

A: The correct answer is given in the second step.

Q: Assume that there is an increase in perceived bankruptcy risk. As a result of this we would expect…

A: Here, it is given that the perceived bankruptcy rate is increased.

Q: 7. Suppose the Federal Reserve decreases the interest paid on reserves held by banks, and households…

A: When the central bank of a country uses tools such as discount rate, interest on reserves and open…

Q: If the Fed opts to employ open market operations to increase the money supply, then

A: ‘Open market operations(OMO)’ is a situation where the central bank buys or sells bonds and other…

Q: When the Fed controls the rate of growth of the money supply to foster macroeconomic stability, this…

A: The United States of America's central bank is referred to as FED or the Federal Reserve System. The…

Q: a. List the three main tools of monetary policy used by the Fed and briefly describe how each of the…

A: Monetary policy is the policy adopted by the monetary authority of a country to control either the…

Q: The graph shows the demand curve for bank reserves, RD. On the graph, draw a point to show the…

A: The federal funds rate is set by Federal Reserve to control the money supply in the economy. The…

Q: if the reserve requirement was so low that no bank felt it was a constraint then a. the arithmetic…

A: Reserve Requirement is defined as the amounts of fund which a bank can hold to meet liabilities in…

Q: When the Federal Reserve buys T-Bonds in the US market. a. Money supply increases b. Money supply…

A: The Federal Reserve is the central bank of the U.S.  Central bank is the principal authority of the…

Q: help please answer in text form with proper workings and explanation for each and every part and…

A:

Q: The Fed can make it cheaper for banks to borrow from the___ by lowering the discount rate.…

A: Borrowing is done by commercial banks from central bank as well as by general public from commercial…

Q: If the fed wants to increase money supply it can _ interest rate

A: Money supply can be defined as the amount of money available in an economy at a particular time. The…

Q: Which statement explains how the Federal Reserve can control rising inflation?

A:

Q: The Fed believes if inflation is high and GDP is high, unemployment is likely to:   a. Increase…

A: Unemployment, the state of one who is equipped for working, effectively looking for work, however…

Q: If the fed buys bonds, price levels will:

A: Purchase and sales of bonds by fed will cause change in its price.

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.