The speculative demand for money a. will always increase proportionally to the precautionary demand for money b. is affected by changes in equity yields but not by interest rate changes on bank deposits

Q: A system of deposit insurance attracts risk-taking entrepreneurs into the banking industry.…

A: Understanding the influence of various stakeholders on the financial behavior of store owners is a…

Q: d) Taxes decrease and at the same time the Fed increases the RRR

A: d. Taxes decrease and at the same time FED increases the RRR Primarily as a result of their…

Q: As a "lender of last resort" the Fed  :protects the deposits of $100,000 or less in all commercial…

A: A lender of last resort is an institution, that offers loans to commercial banks or other depository…

Q: True or false question below. A bank run occurs when individuals desire to put more value into…

A: A bank run refers to a scenario when a large number of customers withdraw their funds from a bank…

Q: The Fed injects money more slowly into the economy: a)Inflation increases b)Inflation decreases…

A: Fed inject s the money through open market operations, changing interest rate, changing reserve…

Q: As a lender/depositor, how would you compare time to demand deposits?     Demand deposits are more…

A: Meaning of Demand Deposit: The term demand deposits refer to the situation under which an…

Q: What are some of the new stimulative monetary policy tools that the Fed used during the 2007-2009…

A: The Federal Reserve, or the Fed, is the central banking system of the United States. It uses various…

Q: The main reason people hold money (in terms of what counts in M1) is to   Group of answer choices…

A: The M1 measure of money includes the liquid forms of money such as cash, demand deposits, traveler’s…

Q: Banks follow the Fed’s lead to influence the economy and prevent a financial downturn? True or false

A: Fed is the supervisor of all the banks in the nation.

Q: Market interest rates are established by the banks or any financial institutions. True or false?

A: Answer -  Market Interest rate - It is the interest rate given on the deposits or other investments…

Q: The Federal Funds Market is actually monitored and manipulated by the Federal Reserve, but…

A: The Fed conducts the open market operations to sell and buy securities which can be bought and sold…

Q: If the supply of financial capital increases   Interest rates will remain unchanged.   Interest…

A: Interest rate is determined by the demand and supply of financial capital.

Q: If banks decide to hold some of their excess reserves instead of lending them all out, then:…

A: Excess Reserves are bank-held capital reserves that exceed the minimum reserve requirement set by a…

Q: As the interest rates decline, the amount of money the public holds rise. True or False

A: Interest rate play an important role in the people's decision to hold money.

Q: When reserve requirements go down from 15% to 10%, this means banks

A: Central Bank instruct commercial banks to reduce reserve ratio to increase the money supply in the…

Q: When the Federal Reserve Bank wants to increase the quantity of money in circulation, it     a)…

A: The ‘Federal Reserve System(FRS)’, also known as the Fed, is the ‘central bank’ of the country U.…

Q: The opportunity cost of holding money: Group of answer choices is zero because money is not an…

A: When earn income we have two options to keep cash. One to keep it idle in the drawer and other to…

Q: If a borrower defaults on a home loan, the bank is likely to do all of the following except -- sell…

A: In finance, default is failure to meet the legal obligations of a loan

Q: If the Fed was concerned about the economy falling into recession, it might accommodate this…

A: Reserve requirement is the amount sets by the central bank of a country at a fixed rate to hold as a…

Q: When the Fed sells bonds, the money supply       A)  selling bonds does not have any effect on…

A: Monetary policy refers to the policy followed by the central bank of a country to control the money…

Q: Will the additional $400,000 which was deposited in the Second National Bank affect the new loan?

A: In a banking system known as fractional reserve banking, banks are only obligated to maintain a…

Q: True or False 1) Starting from equilibrium in the money market, suppose the money supply increases.…

A: In the above diagram, when the supply of money increases from Ms to MS". This leads to a rise in the…

Q: Explain exogenous versus endogenous money supply with the help of diagram

A: The “money supply” is exogenous if we believe that it is set directly by the central bank; private…

Q: When the Fed decreases the discount rate, banks are likely to their lending anc the money supply O…

A: The answer is- B) increase, increases When the fed decrease the discount rate, banks are likely to…

Q: Discuss when and why money supply cannot be seen as exogenously given.

A: The concept of money supply refers to the total sum of money available in an financial system at a…

Q: The federal funds rate is the interest rate that the Fed charges banks for its loans to them…

A: The federal funds rate is the rate at which commercial banks borrow and lend their excess reserves…

Q: 27) During the 2008 recession, the Federal funds "Discount" rate was set by the Fed at a record low…

A: The real interest rate can be calculated using Fisher's equation by deducting the nominal interest…

Q: c) The price level decreases and at the same time the Fed conducts an open market sale.

A: Money demand is given by the demand for real money balances as M/P where M is nominal money demand…

Q: The interest rate is the opportunity cost of holding money. Select one: True False

A: Opportunity cost is the value of next best alternative of the resources.

Q: Federal funds   A. provide banks with an immediate infusion of reserves. B. are short-term funds…

A: Federal funds is a  type of interbank SR loan ,this transactions involve the lending of excess…

Q: The Federal Reserve Board influences the national economy by adjusting interest rates. 1) True 2)

A: The Federal Reserve Board, often referred to as the Fed, is the central banking system of the United…

Q: dentify regulators in sectors apart from financial services, that should be involved in the Central…

A: Banking regulators are government offices or specialists that manage the banking business. They are…

Q: Explain why the Reserve Supply is perfectly elastic at Discount Window

A: A central bank lending tool called the discount window was created to assist commercial banks in…