Q9 “China's central bank Monday conducted a total of 10 billion yuan (about $1.4 billion) of reverse repos to maintain liquidity in the banking system. The interest rate for the seven-day reverse repos was set at 2 percent, according to the People's Bank of China. The move aims to keep stable liquidity in the banking system, the central bank said. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.” The measure of money that will not be immediately affected by the above action by China’s central bank is: a) M1 b) M2 c) M3 d) Quasi money
Q9 “China's central bank Monday conducted a total of 10 billion yuan (about $1.4 billion) of reverse repos to maintain liquidity in the banking system. The interest rate for the seven-day reverse repos was set at 2 percent, according to the People's Bank of China. The move aims to keep stable liquidity in the banking system, the central bank said. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.” The measure of money that will not be immediately affected by the above action by China’s central bank is: a) M1 b) M2 c) M3 d) Quasi money
Chapter15: Money Creation
Section: Chapter Questions
Problem 17SQ
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Q9
“China's central bank Monday conducted a total of 10 billion yuan (about $1.4 billion) of reverse repos to
maintain liquidity in the banking system.
The interest rate for the seven-day reverse repos was set at 2 percent, according to the People's Bank of
China.
The move aims to keep stable liquidity in the banking system, the central bank said.
A reverse repo is a process in which the central bank purchases securities from commercial banks through
bidding, with an agreement to sell them back in the future.”
The measure of money that will not be immediately affected by the above
action by China’s central bank is:
a) M1
b) M2
c) M3
d) Quasi money
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