Say that currently, in the market for reserves, the discount rate is above the federal funds rate. If the Federal Reserve Bank begins to sell securities, then the amount of Non-Borrowed Reserves in the economy will and so, then the federal funds rate will O increase; fall O increase; rise O decrease; fall O decrease; rise

Say that currently, in the market for reserves, the discount rate is above the federal funds rate. If the Federal Reserve Bank begins to sell securities, then the amount of Non-Borrowed Reserves in the economy will and so, then the federal funds rate will O increase; fall O increase; rise O decrease; fall O decrease; rise

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The Federal Reserve Banks are owned by the: 1) Federal government 2) Board of Governors 3) United States Treasury O 4) Member banks
If Bank A has $3.8 million in total deposits, $860,000 in total reserves, and faces a 12 percent reserve requirement, the amount of money that Bank A could initially create by loaning out their excess reserves is: O $100,000. O $385,000 $404,000 O $756,800 O $3,366,667
If the Fed sells U.S. government securities to banks, the federal funds rate and banks' reserves O a. rises; increase O b. rises; decrease O c. falls; decrease O d. falls; increase O e. rises; do not change
Which of the following is NOT a function performed by a central bank? O a. Serving as a lender of last resort to commercial banks O b. Taking the deposits of commercial banks Making profits for its shareholders O d. Regulating the money supply
Suppose you read in the Wall Street Journal that the Fed was "increasing its target interest rate." It follows that the rate in question is the and one way in which Fed could achieve its new, higher target rate is by Select one: O a. Federal Funds Rate; conducting an open market sale O b. Federal Funds Rate; conducting an open market purchase O c. Prime Rate; conducting an open market sale d. Prime Rate; conducting an open market purchase
If a bank gets $90 in new reserves from the Fed and the required-reserve ratio is 0.1, then the maximum amount by which total deposits in the economy can increase is O $900 O $90 O $9 O $80
Which of the following are tools the Federal Reserve uses to control the supply of mone Select one: O a. Open market operations O b. Term auction facility c. Interest of reserves d. Discount rate e. All of the above O O O
By using open market operations, the Federal Reserve O a. adjusts the supply AND demand of reserves to keep the federal funds interest rate equal to its target. O b. adjusts the supply of reserves to keep the federal funds interest rate equal to its target. Oc controls banks' demand for reserves, thereby keeping the federal funds rate equal to its target. O d. adjusts the demand of reserves to keep bank rates in line with the federal funds rate target. O e. None of these answers is correct.
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Using the simply multiple deposit multiplier model, the Federal Reserve Bank desires to increase the size of checkable deposits by $50,500. If the required reserve ratio is 5%, then the Fed needs to purchase worth of securities in the open market. O $2,445 O $2,650 O $2,525 O $2,500
Suppose the required reserve ratio is 10% and a bank receives a $10 million deposit into a checking account. By how much will deposits change in the banking system? (assume that the banking system currently has no excess reserves) Select one: $100 million. O $90 million. $10 million. O $110 million. Clear my choice
The following graph shows a hypothetical demand function for federal funds . Currently , the total amount of reserves in the banking system is $ 50 billion , the discount rate is 3.5 percent , and interest on reserves equals IOR = 1 percent . If the Fed reduces the discount rate to 3.00 percent , the equilibrium federal funds rate ( FFR ) will equal : O a . FFR 3.00% O b . FFR = 2.50% O c . FFR = 2.00% O d . FFR 1.50% O e . None of the above.