When the Federal Reserve sells government securities on the open market, what effect does this action have on the nation's money supply and interest rates? Money Supply - Decreases/Interest Rates - Increase O Money Supply - Increases/Interest Rates Decrease
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- Question 3 In the market for reserves, suppose that the federal funds rate and discount rate are both at 7%. If the Federal Reserve Bank sells securities in the open market, then the equilibrium rate for reserves will and the amount of borrowed reserves will O not change; decrease O not change; increase O rise; increase O rise; decrease Question 4 When the Federal Reserve Bank lowers the reserve requirements for commercial banks in the economy, this causes the curve for reserves to decrease and so the curve shifts to the ----- O demand; right O demand: left O supply; right O supply; leftWhy do U.S. Treasury bills have lower interest rates than large-denomination negotiable bank CDs? A. Bank CDs are affected by inflation differently than are Treasury bills. B. Treasuries are considered to be risk-free debt instruments. C. Treasury bills are short-term debt instruments, whereas CDs are medium-term debt instruments. D. Treasury rates are set by the Federal Reserve at a greater rate than the market-determined CD rate.This question asks how the money market graph is affected by a specific event. Note that the money market graph is the graph with the money supply and money demand curves If regulation is passed that makes it more difficult for consumers to withdraw money from existing savings accounts. then how is the money market graph affected? a. increase in equilibrium interest rates, and increase in the equilibrium quantity of money O b. decrease in equilibrium interest rates, and decrease in the equilibrium quantity of money O c. decrease in equilibrium interest rates, and increase in the equilibrium quantity of money Od increase in equilibrium interest rates, and decrease in the equilibrium quantity of money O e no change in equilibrium interest rates, and no change in the equilibrium quantity of money
- Which of the following would NOT result in a decreased money supply? Select one: O a. Decrease in the reserve ratio b. Increase in the currency ratio Decrease in the money multiplier d. Decrease in the monetary base C.suppose the reserve requirement is 10 percent and the balance sheet of the peoples national bank looks like the accompanying example.ASSETSvault cash - $20,000deposits at fed - 30,000securities - 45,000loans - 120,000LIABILITIESchecking deposits - $200,000net worth - 15,000answer the following:A. what are the required reserves of people national bank? does the bank have any excess reserves?B. what is the maximum loan that the bank could extend?C. indicate how the banks balance sheet would be altered if it extended this loan.D. suppose that the required reserves were 20 percent. if this were the case, would the bank be in a position to extend any additional loans? explain2. The original interest rate is at 2%. Suppose the central bank decreased the money supply. Which of the following new interest rate is possible due to the change in the level of money supply? a. 1.5% b. 1.0% C. 4.0%
- Suppose that banks hold reserves of 5 per cent against cheque account deposits. a If the RBA sells $1 million of government securities, what is the effect on the economy’s reserves and money supply? b Suppose banks decide to increase their reserves to 10 per cent. Why might banks choose to do so? What effect does this have on the money supply?I need 3 answers plsEconomics Which set of actions implies that the government will raise the money supply, as measured by M1 or M2, by $100? The Fed raises the reserve requirement at small banks from 5 percent to 10 percent. Outstanding bank loans remain at $100. O The Fed reduces the discount window rate that it lends at from 5 percent to 4 percent, and discount window loans remain unchanged at $100. O The Fed shuts down a bank that has deposits and assets both exactly equal to $100 (and bank equity equal to zero). One branch of the government sells a treasury bill for $100 in order to pay for vaccine supplies, and the Fed purchases that $100 treasury bill with $100 in bank reserves. The Fed sells a $100 treasury bill to a private bank for $100 in reserves.
- 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.In a regime of abundant reserves, the highest possible level of the fed funds rate that is on the demand curve for reserves is determined by A. the rate of interest on reserve balances, IORB. O B. the primary credit discount rate. OC. the interest rate on three-month Treasury bills. D. the prime interest rate. In a regime of abundant reserves, the lowest possible level of the fed funds rate that is on the demand curve for reserves is determined by OA. the primary credit discount rate. OB. the rate of interest on reserve balances, IORB. O C. the prime interest ratePlease answer the question and graph the new curve with the graph provided! Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.