QUESTION 1 Suppose that the Fed wants to increase money supply using open-market operations. A purchase of short-term government bonds in the amount of $10 mln will increase money supply by O A. $10 mln B. less than $10 min OC. more than $10 mln

QUESTION 1 Suppose that the Fed wants to increase money supply using open-market operations. A purchase of short-term government bonds in the amount of $10 mln will increase money supply by O A. $10 mln B. less than $10 min OC. more than $10 mln

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the Fed is pursuing a fixed interest rate target, an increase in the money supply will be required when Select one: O a. money demand increases. O b. GDP decreases. c. M2 increases relative to M1, because the transaction cost of transferring money from savings accounts to checking accounts declines. O d. money demand decreases.
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.
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