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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QUESTION 5 Which of the following can the Federal Reserve do to reduce money supply O A. lower reserve requirements O B. issue more currency C. sell government bonds D. buy government bonds
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Big bucks bank Assets Liabilities Total reserves $30mm demand deposits $190mm Loans $100mm Bonds $100mm Stockholder equity $40 mm Suppose the required reserve ratio is 10%. What is the maximum amount of money Big buck bank can create? If the reserve ratio is increased to 14%, what is the maximum amount of money BBB can create? 3 If the reserve ratio is still at 10% and BBB chose to buy bonds instead of making loans with its excess reserves, what is the maximum amount of money BBB can create? a) From question #1 & #3, if the prospective Loans and Bonds both paid interest of 6.8%, which strategy would be more profitable for BBB? b) If BBB decided to pursue #1 as a strategy, what is the maximum money making potential of the banking…
If a bank receives a deposit of $10,000 and the banking system is characterized by fractional reserve banking, we would expect that the ... Group of answer choices a. The banking system would create less than $10,000 of new money b. The banking system would create more than $10,000 of new money c. The banking system does not create money, only the Federal Reserve creates money
The federal funds rate A. equals the discount rate. B. only matters to banks and has very little impact on individual consumers. C. is set by the Federal Reserve Bank. D. is the rate that banks charge each other for short-term loans of excess reserves.
The federal funds rate is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the interest rate that the Federal Reserve charges banks when banks borrow reserves from the Federal Reserve. b the market interest rate that banks pay each other when they borrow reserves from each other. c the interest rate the the Federal Reserve pays on banks' required reserves. d the interest rate that the Federal Reserve pays on banks' excess reserves.
Which statement about banks and risk is not correct? Select one: a. Banks face liquidity risks from lending activities. This is because the bank's assets are tied up in short- term loans whilst bank liabilities are longer-term b. Banks face credit risks from lending activities. To reduce this risk, banks require that potential borrowers put up some of their own funds or assets to serve as collateral C. Banks create bank money through their lending activities. The amount of bank money in an economy exceeds the amount of base money issued by the central bank creating liquidity risk for the bank
1. The Federal Reserve a. Is the large stockpile of currency reserved for wartime uses b. May be used for Federal, but not state government uses c. Is responsible for controlling the money supply d. Was established in 1789 with the ratifying of the Constitution 2.In a system of 100% reserve banking, $100 is deposited. What is the money multiplier? a. Depends on what is withdrawn from the account b. 1 c. $100 d. There is insufficient information to state the value of the money multiplier
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The federal reserve organization
16. An open-market sale of government bonds by the Fed results---------in reserves and ---------in the supply of money. a) an increase; a decrease (b) a decrease; a decrease (c) an increase; an increase (d) a decrease; an increase