If the Federal Reserve decreases the discount rate from 8 percent to 6 percent banks will borrowMultiple Choicefewer reserves from the Fed and lending will increase.Omore reserves from the Fed and lending will decrease.fewer reserves from the Fed and lending will decrease.more reserves from the Fed and lending will increase.< Prev14 of 25

In essence, banks can borrow money for less when the Federal Reserve lowers the discount rate from…

Answered: If the Federal Reserve decreases the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Table 10-2 Last Bank of Cedar Bend Assets: Reserves Loans Liabilities: $25 000 Deposits $180 000 S155 000 efer to the Table 10-2. If the reserve requirement is 10 percent and then someone deposits $50 000 into the bank, what is the bank's reserve osition? alect one: cross a. It will have $52 000 in excess reserves. cros b. It will need to raise reserves by $5000. cros c. It will have $57 000 in excess reserves. d. It will have excess reserves of $2000.
5. If reserves are scarce, how would the federal funds rate change (increase or decrease) if the Fed: 1) sells mortgage-backed securities 2) decreases the (minimum) reserve requirements 3) conducts overnight repo operations 4) conducts overnight reverse repo operations
A bank that has assets of $150 billion and a net worth of $30 billion must have Multiple Choice О liabilities of $30 billion. O liabilities of $120 billion. О excess reserves of $120 billion. excess reserves of $30 billion.
Saved There is a reserve requirement of 23 percent in the United States. If the Federal Reserve makes an open market purchase of $23 million, the money supply will Multiple Choice Graw Hill decrease by $100 million. increase by $529 million. decrease by $529 million. increase by $100 million. 1 ! 87 & R T Y U ( 8 9 1 0 0 D F G H J K
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Chapter 16: Reserves = $1,500 First national bank Loaned = $8,500 Chapter 17: Deposits = $10,000 Money Created = Amount x MM 1. If the bank has to maintain a required reeserve ratio of 10% then what is the excess reserve if any? 1/P 2. If the reserve ratio is 10% then what will be money multiplier 3. How much extra money the bank will be able to create with an addtional MS 3/4 # 1/2 0 Total Reserve = Required Reserve + Excess Reserve Money Multiplier = 1/R Where R is Reserve Ratio MD 1. What is the price level at the equilibirum? 2. What is the value of money at the equilibirum? 3. If the velocity is 4, money supply is 100, price level is 10 then what will be the output? MXV=PXY P= Price level Value of Money = 1/P
9 If the interest rate................... opportunity cost of holding money decreases, and the quantity demanded of money increases; decreases decreases; increases £0000 increases; also increases does not change; does not change 10 If the total deposits-on-demand in Bank A total $500 mil and the required reserve ratio is 2.5 percent, then required reserves at Bank A equal more than 1,300,000,000 equal to 13,000,000 less than 13,000,000 more than 13,000,000
A banking system has deposits of $1000, loans of $600, bonds of $200 and reserves of $200. The central bank has jus raised the reserve ratio to 0.25. Caiculate the value of bonds banks could sell to the central bank to comply with this change, keeping loans constant. Do not include a dollar sign ($) in your answer and round all money answers to 2 decimal places, if required.
A bank has a 5 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement. Select one: a.None of them. b.lt has $1,000 in reserves and $3,000 in loans. c.lt has $20 in reserves and $4,980 in loans. d.It has $200 in reserves and $4,800 in loans.
When the reserve requirement is decreased, the excess reserves of member banks are Multiple Choice O reduced, but the multiple by which the commercial banking system can lend is unaffected. O reduced and the multiple by which the commercial banking system can lend is increased. O increased and the multiple by which the commercial banking system can lend is increased. increased and the multiple by which the commercial banking system can lend is reduced.
#5 If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold a more reserves, so the reserve ratio will rise. b fewer reserves, so the reserve ratio will fall. c fewer reserves, so the reserve ratio will rise. d more reserves, so the reserve ratio will fall.
Initial deposit is $10,000 Required Reserve Ratio is 20% Calculate: $ Multiplier Required Reserves Excess Reserves Potential $ Created Initial deposit is $10,000 Required Reserve Ratio is lowered to 10% Calculate: $ Multiplier Required Reserves Excess Reserves Potential $ Created

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