Which of the following is a policy tool of the Federal Reserve that it actively uses to control themonetary base and conduct monetary policy?All of the other answers are correct.O Open market operationsO Setting the reserve requirementO Setting the discount rate

Monetary policy is a set of tools used by a country's central bank to encourage long-term economic…

Which of the following is a policy tool of the Federal Reserve that it actively uses to control the monetary base and conduct monetary policy? O All of the other answers are correct. O Open market operations O Setting the reserve requirement O Setting the discount rate

Which of the following is a policy tool of the Federal Reserve that it actively uses to control the monetary base and conduct monetary policy? O All of the other answers are correct. O Open market operations O Setting the reserve requirement O Setting the discount rate

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 24P

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Which of the following is a policy tool of the Federal Reserve that it actively uses to control the
monetary base and conduct monetary policy?
All of the other answers are correct.
O Open market operations
O Setting the reserve requirement
O Setting the discount rate

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Consider the model of supply and demand for central bank money. Assumethat there there are commercial banks. Suppose that people hold 20% of their moneyin currency and 80% of their money in deposits. The central bank sets the reserve-todeposit ratio at 10%. In the first period, the central bank increases the supply of moneyby $200, buying bonds through Open-Market Operations. Use this information to answerthe following questions:(a) For the second period (after the central bank has injected $200 in theeconomy), calculate: (i) the demand for currency, (ii) the amount of deposit held atthe commercial banks, (iii) the demand for reserves held at the central bank, and(iv) the demand for the high-powered money. How much is the additional moneysupply created at the end of the second period?2(b) How much is the additional money supply created at the end of the thirdperiod?(c) As time continues, additional money supply will be created. Calculatethe total increase in the money supply as a…
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Suppose that the Federal Reserve conducts an open market sale. This is considered monetary policy. In response, the size of the monetary base and the size of the money supply O contractionary; grows; grows by more expansionary: grows; grows by more contractionary; shrinks; shrinks by less O contractionary; shrinks; shrinks by more O expansionary; grows; grows by less
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The central bank sold existing government securities in an open market operation. Which of the following changes is the most likely result of this action? Select one: a. The reserve requirement decreases. O b. The nominal interest rate increases. O c. The discount rate increases O d. Bank reserves increase.
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Please answer fast please help arjent in both questions