.the reserve requirements d OIf the reserve ratio is 4 percent, then the money multiplier is30 Jإختر أحد الخيارات1.00 a24 a Oعليع هذا السزال25 b O26 .c O.4 d O31 JThe Fed decreases reserves if it conducts open market1.00purchases or auctions term credit a O4530purchases but not if it auctions term credit .b O.c Osales or auctions term creditsales but not if it auctions term credit d O

The reserve requirement ratio is the ratio that the bank uses to determines the amount of money that…

If the reserve ratio is 4 percent, then the money multiplier is 30 J إختر أحد الخيارات 1.00 24 a O 25 b O 26 .c O .4 d O The Fed decreases reserves if it conducts open market 31 J إختر أحد الخيارات 1.00 purchases or auctions term credit .a O 2338 purchases but not if it auctions term credit .b O sales or auctions term credit.cO sales but not if it auctions term credit d O

If the reserve ratio is 4 percent, then the money multiplier is 30 J إختر أحد الخيارات 1.00 24 a O 25 b O 26 .c O .4 d O The Fed decreases reserves if it conducts open market 31 J إختر أحد الخيارات 1.00 purchases or auctions term credit .a O 2338 purchases but not if it auctions term credit .b O sales or auctions term credit.cO sales but not if it auctions term credit d O

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 required reserve ratio increased from 5 percent to 10 percent, and suppose banks kept no excess reserves. Ceteris paribus, it follows that the "money" (or "deposit") multiplier would: Select one: O a. decrease from 20 to 10. O b. increase from 5 to 10. O c. decrease from 10 to 20. O d. decrease from 1/5 to1/10.
16. Suppose that the Federal Reserve conducts an open market operation in which it purchases $100 in US Treasury bonds from a private saver. (a) In an economy without banks, by how much, in dollar terms, will the total money supply increase as a result of this open market operation? (b) In an economy with banks in which all members of the nonbank public immedi- ately deposit all of the currency they receive, but in which all banks engage in 100 percent reserve banking, by how much will the total money supply increase as a result of this open market operation? (c) In an economy with banks, in which all banks choose a 10% reserve ratio and in which all members of the nonbank public immediately deposit all of the currency they receive, by how much will the total money supply increase as a result of this open market operation? (d) In an economy with banks, in which all banks choose a 10% reserve ratio, but in which all members of the nonbank public hold 50% of the funds they receive as…
QUESTION 4 Peter withdraws $5000 from his savings account. Then he deposits $4000 in his checking account and puts the remaining $1000 in a safe box in his house. What is the overall effect of these actions on M1 and M2? O A. M1 rises by $5000, M2 falls by $5000 O B. M1 is unchanged, M2 is unchanged O C. M1 rises by $5000, M2 is unchanged O D. M1 is unchanged, M2 falls by $5000
MSo MS, 10 2 MD 3.0 3.1 3.2 3.3 3.4 3.5 Real money (trillions of 2000 dollars) The figure above illustrates the effect of 1) a decrease in the required reserve ratio. O 2) an increase in the required reserve ratio. O 3) a rise in the discount rate. O 4) a Fed open market sale of government securities. Interest rate (percent per year)
Table 29-6. Reserves Loans O $106,000 O $60,000 O $72,000 Assets O $50,200 Bank of Springfield $19,200 228,000 Refer to Table 29-6. Assume the Fed's reserve requirement is 6 percent and that the Bank of Springfield makes new loans so as to make its new reserve ratio 6 percent. From then on, no bank holds any excess reserves. Assume also that people hold only deposits and no currency. Then by what amount does the economy's money supply increase? Deposits Liabilities $240,000
sters 13,14,15,16 ss2023 Price Level FI Multiple Choice Figure 15.6 (Figure 15.6) Which of the following Fed actions is most likely to decrease the aggregate demand curve from AD2 to AD₁? O O 2 S W Real Output decreasing the reserve requirement lowering the discount rate F2 buying bonds in the open market H Q Search. *m AS AD₂ AD₁ # 3 A E D 4) $ 4 R F Pll 45 % FS T G PrtScn J F8 * 8 Home 1 M F9 ( 9 K End F10 O ) PgUp 0 L F11 P dtv Help PgDn F12 { Seve & Em 1 + =
Suppose the Fed decided to purchase $100 billion worth of government securities in the open market. Assume all payments are directly deposited into or withdrawn from the banking system. What impact would this action have on the economy? Specifically, answer the following questions. Instructions: Enter your responses as a whole number. a. How will M1 be affected initially? O Decrease by $100 billion O Increase by $100 billion O Not enough information to answer O No initial change to M1 b. By how much will the banking system's lending capacity increase if the reserve requirement is 20 percent? $ billion c. Must interest rates rise or fall to induce investors to utilize this expanded lending capacity? O Rise O Fall d. By how much will aggregate demand initially increase if investors borrow and spend all the newly available credit? $ billion e. Under what circumstances would the Fed be pursuing such an open market policy? O Inflation O Recession f. To attain those same objectives, what…
If Janet expects interest rates to rise in the near future, she will probably be willing to Select one: O a. maintain only the current holding of bonds. O b. O c. buy bonds now, and hold less money. put her money under her mattress rather than in a bank account. O d. buy bonds now, but only if their price falls. O e. sell bonds now, and hold more money.
When a bank suffers deposit outflows and has no excess reserves, the bank will generally first try to raise the funds by O A. calling in some loans. B. borrowing from the Fed. C. selling some of its securities. D. selling some loans. Suppose that a bank has $80 in checkable deposits, reserves of $15, and a reserve requirement of 10%. Also assume that the the bank suffers a $10 deposit outflow. If the bank chooses to borrow from the Fed to meet its reserve requirement, then the bank would need to borrow $. (Round your response to the nearest two decimal place.)
If a bank gets $100 in new reserves from the Fed and the required-reserve ratio is 0.2, then the O rate of interest falls in the economy O money supply grows by $500 O money multiplier is 5 O all of the above
How much money is created by a bank with $20 million in assets if it lends out half of its assets with a required reserve ratio of 10%. O $100,000,000 O $50,000,000 $1,000,000,000 $10,000
Suppose the current real federal funds rate in the economy is 3.0%, the current inflation rate is 1.5%, the Federal Reserve's target inflation rate is 2.0%, and the output gap is -2.0%. According to the Taylor Rule, the Federal Reserve's target federal funds rate should be Select one: O a. 3.25%. O b. 3.75%. O c. 2.5%. O d. 2.75%.