The overnight cash rate is determined: Select one: a. administratively by the Reserve Bank of Australia. O b. by the supply of and demand for cash. O c. directly by household demand for funds. O d. directly by firm demand for funds.
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- Which of the following about saving deposits a-under M2 supply, they they are bank accounts that you cannot white a check from directly. generally moneyl to be kept asided. you can easily withdraw money cash from these aacounts at an automatic teller machine or back d- included in M1 money supply these are the monies held in checking accounts. they are called demand deposits or chekable deposits because the bank must give the deposit holder his money on demand when a check is written or a debit card is used c- included in M1 money supply therefore, very lliquid these are coins and bills that vcirvulate in an economy that are NOT held by the US treasury Federal reserve bank, or in any bank vaults so the cash you havae in your wallet pocket right now d- under M2 money sypplly funds that you invest in where the deposits of many investors are pooled together and invested in a safe way such as short term goverment bods.The demand for money arises out of the need to hold money as a medium of exchange. This demand for money is a function of O A. transactions; interest rates O B. transactions; national income O C. precautionary; interest rates OD. speculative; interest ratesThe essential characteristic required before any substance can function as money is that O none of the options is correct it be issued by the government. O people accept it as money. O the supply of it be unlimited and uncontrolled. O it be backed by a precious metal.
- The transaction demand for money is positively related to O a. Interest rates O b. Income O c. Foreign exchange rates O d. All of the answers are correctConsidering open market operations, which of the following observations is incorrect? O it can be implemented quickly and cheaply. O it can be done quietly without à lot of political debate O it is potentially the most powerful tool to control the supply of money. O it is the most important method now used to control the supply of money.1. Will an overnight repo agreement increase or decrease the money supply?
- The United States Federal Reserve is currently the money supply with the intention of keeping short-term interest rates O A. increasing, high B. increasing, low O C. decreasing, low O D. decreasing, high Reset SelectionUse the figure below to answer the following question(s): Rate of Interest (%) O OG OC OH Sm3 OD 00 Smi 10 Sm2 D Q3 Q₁ Q₂ Quantity of Money -Dmz -Dm1 Refer to the above graph which shows the supply and demand for money where Dm1, Dm2, and Dm3 represent different demands for money and Sm1, Sm2, and Sm3 represent different levels of the money supply. The initial equilibrium point is A. What will be the new equilibrium point following an increase in the money supply? -Dm3 Jhay GExhibit 15.3 Sm S'm Dm M. Quantity of money M' Exhibit 15.3 shows equilibrium in a money market. What happens if the money supply curve shifts from S to S'm while the rate of interest remains at i? O a. There will be an excess supply of money. O b. The quantity of money demanded will fall. Oc. The quantity of money supplied will fall. Od. The Fed will buy U.S. Treasury securities. O e. There will be an excess demand for money. Interest rate
- If you are unable to see the graph below: Vertical MS croxses downward sloping Money Demand at 3% Interest Rate MS 4% b. 3% 2% Money Demand Quantity of Money There is an excess supply of money at an interest rate of 4% an interest rate of 2% O None of the above are correct. an interest rate of 3%Interest Rate 4% 3 2. O2 percent 0 percent 4 percent a 3 percent MS b d Refer to Figure 15-1. At which interest rate is there an excess money supply? Money Demand Quantity of Moneyi Peter Kotrodimos puts $100 into his checking account. The reserve requirement for the bank is.20. and the maximum the money supply would After this transaction, demand deposits increased by increase with this transaction would be A) $100; $600 B) $0; $400 $100; $400 D) $100; $500