Answered: When the Federal Reserve Bank wants to…

When the Federal Reserve Bank wants to increase the quantity of money in circulation, it a) sells government securities. b) increases taxes. c) buys government securities. d) decreases taxes.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section21.2: The Federal Reserve System

Problem 2QQ

See similar textbooks

Similar questions

Banks don't lend out all of the funds deposited because: A) they need to make more money on interest-bearing deposits. B) they need to reduce their liquidity position. C) it would not be profitable. D) they have to satisfy any depositor who wants to withdraw funds.
11) Which of the following increases the quantity of money? A) an individual's cash withdrawal from a bank B) an individual's purchase of a government security from the Fed C) the Fed's purchase of a government security D) an increase in the government's budget deficit 12) Open market purchases by the Federal Reserve System (the Fed) A) raise the federal funds rate. B) increase bank reserves. C) occur when the Fed wants to decrease the quantity of money. D) All of the above answers are correct. 13) When the Fed raises the federal funds rate, A) net exports increase. B) the value of the dollar falls on the foreign exchange market. C) the value of the dollar rises on the foreign exchange market. D) consumption increases. 14) If the Fed raises the federal funds rate so that the exchange rate rises, then imports ________ and exports ________. A) increase; increase B) increase; decrease C) decrease; increase D)…
Federal funds are A) created as banks to lend out money. B) any funds printed by the federal government. C)private bank deposits at the Federal Reserve (Fed). C) Fed deposits at private banks. D) government agency deposits at the Fed.
The Bank of Canada sets the reserve requirement, which banks must meet through deposits at the Bank of Canada and cash held at the bank. What do these requirements achieve? Check all that apply. They help to facilitate transfers of funds between banks when a customer from one bank writes a cheque to a customer of another. They help to control the money supply. They help to prevent bank runs by reassuring the public that banks will not make too many loans and run out of cash. They mean that a bank must have one dollar of deposits for every dollar it lends.
In order to increase the money supply, the Fed can A) Raise the reserve requirement, increase the discount rate, or sell bonds. B) Raise the reserve requirement, increase the discount rate, or buy bonds. C) Lower the reserve requirement, increase the discount rate, or buy bonds. D) Lower the reserve requirement, decrease the discount rate, or buy bonds.
If banks decide to hold some of their excess reserves instead of lending them all out, then: A) the money multiplier will be less than 1 divided by the required reserve ratio. B) depositors will have to borrow more in order to increase the money supply. C) the money multiplier becomes 1 divided by the excess reserves. D) a loan of $1 will lead to a change in the money supply by a multiple amount equal to 1 divided by the required reserve ratio.
The Federal Reserve was created to: increase employment in the United States. establish a banking system in the United States. provide stability in the banking sector and the economy. correct deflation in the United States.
What steps can the Federal Reserve take to increase the money supply? a) The Federal Reserve can reduce personal income tax rates to encourage households to spend more money b) The Federal Reserve can require all banks to close by 4:00 pm on weekdays and remain closed on weekends. c) The Federal Reserve can increase reserves requirements for banks d) The Federal Reserve and raise the discount e) The Federal Reserve can buy US Treasury securities e) The Federal Reserve
If the Federal Reserve wants to decrease the money supply, then it should Check all that apply. Group of answer choices buy U.S. bonds. sell U.S. bonds. increase the required reserve ratio. increase taxes. decrease the discount rate.
Banks borrow money at a much higher rate from the fed then they offer you for loans. True or false
The task I am struggling with: Tracy Williams deposits $500 that was in her sock drawer into a checking account at the local bank. The reserve ratio is 10%. a) how dies the deposit initially change the T-account of the local bank? How does it change the money supply? b) If the bank maintains a reserve ratio of 10%, how will it respond to the new deposit? c) if every time the bank makes a loan, the loan results in a new checkable bank deposit in a different bank equal to the amount of the loan, by how much could the total money supply in the economy expand in response to Tracy´s initial cash deposit of $500? Thank you very much for your help.
Which of the following is the role of the Federal Reserve System? Select one: a. Set the Required Reserve Ratio for Bank of America b. Manage the account for South Carolina and other state governments c. Make loans to local businesses d. Print new money e. All of these are roles of the Fed