QUESTION 6 A central bank that desires to reduce the quantity of money will: a. a. Reduce the reserve requirements, reduce the discount rate, and sell the treasury securities in open market. a. Increase the reserve requirements, increase the discount rate, and purchase the treasury securities in open market. b. a. Increase the reserve requirements, reduce the discount rate, and sell the treasury securities in open market. Oc. a. Increase the reserve requirements, increase the discount rate, and sell the treasury securities in open market. Od.

QUESTION 6 A central bank that desires to reduce the quantity of money will: a. a. Reduce the reserve requirements, reduce the discount rate, and sell the treasury securities in open market. a. Increase the reserve requirements, increase the discount rate, and purchase the treasury securities in open market. b. a. Increase the reserve requirements, reduce the discount rate, and sell the treasury securities in open market. Oc. a. Increase the reserve requirements, increase the discount rate, and sell the treasury securities in open market. Od.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Subject to the approval of the board of Governors, the decision of choosing the president of a district Federal Reserve bank is made by: A. All 9 district bankers B. The 6 district bank directors elected by the member banks C. 3 district bank directors who are professional bankers D. Class B and Class C directors 2. Assuming initially that the required reserve ratio = 10%, the currency-deposit ratio = 40%, and the excess reserve ratio = 0, a decrease in the required reserve ratio to 5% causes the M1 money multiplier to everything else held constant. A. Increase from 2.8 to 3.11 B. Decrease from 3.11 to 2.8 C. Increase from 2 to 2.22 D. Decrease from 2.22 to 2 %3D
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If the reserve ratio is 25%, and banks do not hold excess reserves, when the fed sells $40 million of bonds to the public, bank reserves A. Increase by $40 million and the money supply eventually increases by $100 million B. Increase by $40 million and the money supply eventually increases by $160 million C. Decrease by $40 million and the money supply eventually decreases by $100 million D. Decrease by $40 million and the money supply eventually decreases by $160 million
Explain which interest rate sets the upper limit on the federal funds rate. The upper limit on the federal funds rate is the _______ because _______. A. discount rate; the discount rate must be 1 percent higher than the federal funds rate B. interest on reserves rate; a bank will borrow reserves only if the federal funds rate is less than the interest on reserves rate C. discount rate; a bank will borrow reserves only if the federal funds rate is less than the discount rate D. long-term real interest rate; the loanable funds market determines the federal funds rate range
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U.S Treasury bill are (n)... a) liability of the U.S government but an asset to the Federal Reserve. b) liability to both the U.S government and the federal reserve. c)asset of the U.U government but a liability to the Federal Reserve. d) part of the networth of the U.S government.
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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
1. Which of these is a basic goal of the Federal Reserve System? a. export promotion b. zero interest rates c. a balanced federal budget d. full employment
Which of the following is a potential operating instrument for the central bank? Question content area bottom Part 1 A. Nominal GDP B. The discount rate C. The monetary base D. The M1 money supply
11 1 point Table 30-4 Reserves Loans Bank of Socorro Assets Liabilities $4,800 Deposits 75,200 $80,000 Refer to Table 30-4. Assume the Fed's reserve requirement is 4 percent and all banks besides the Bank of Socorro are exactly in compliance with the 4 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Socorro decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase? $40,756.98 $40,000.00 $26,666.67 $42,930.49