Which of the following lists two things that both increase the money supply? a. The Fed buys bonds and raises the discount rate b. The Fed buys bonds and lowers the discount rate c. The Fed sells bonds and raises the discount rate

Which of the following lists two things that both increase the money supply? a. The Fed buys bonds and raises the discount rate b. The Fed buys bonds and lowers the discount rate c. The Fed sells bonds and raises the discount rate

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter13: Monetary Policy

Section: Chapter Questions

Problem 5E

See similar textbooks

Related questions

Q: While cleaning your apartment, you look under the sofa cushion and find a $300 bill (and a…

A: The reserve requirement dictates to banks what percentage of the total amount deposited with them…

Q: If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

A: Open Market Operation:- To keep the amount of money in circulation under control, the Federal Bank…

Q: The Federal Reserve manages the amount of money in circulation by buying or selling U.S. Treasury…

A: The Federal Reserves is the central bank of the U.S. who is solely responsible for controlling the…

Q: Suppose that the Federal Reserve wants to reduce the money supply. Explain the three main policy…

A: Monetary policy refers to the tool which is used by central bank in order to increase or decrease…

Q: Draw a graph of the money market. Show the effect on the money demand curve, the money supply curve,…

A: As per the guidelines we are allowed to answer the first three subparts. Please post the remaining…

Q: If the central bank increases the discount rate it charges when it makes loans to banks, then the…

A: Due to increase in interest rate,monetary base and money supply would decrease.

Q: Which of the following is one of the Fed's policy tools? One of the Fed's policy tools is…

A: Monetary policy: - it is a tool of government or central bank of a country in which they control…

Q: Which of the following will result when the Federal Reserve increases the reserve requirement? A.…

A: The actions by the monetary authorities (central bank) to either expand or tighten the economy in…

Q: In the United States, the Federal Reserve sets the reserve requirement, which banks must meet…

A: Reserve requirements refer to the regulations and policies set by a central bank (such as the…

Q: If the Fed has announced that it plans on increasing the interest rate it will

A: If a person borrow a sum of amount it has to pay a percentage of principal to the lender which is…

Q: the Fed believes that the quantity of money should

A: The central can achieve its monetary policy goals in either of two ways: targeting the quantity of…

Q: Economics If the Fed increases the monetary base by $73 million and the money multiplier is 1.6,…

A: The money supply refers to the circulation of money in the economy wherein the economy needs funds…

Q: If an economy is operating at full employment and there is a substantial increase in the money…

A: Full employment: - Full employment is that level of employment where the maximum possible labor…

Q: If the Fed decides to sell U.S. Treasury bonds on the open market, how will the money supply and…

A: Due to selling of treasury bonds,money supply would decrease. Interest rates would increase,because…

Q: Banks and the money supply: 1. While cleaning your apartment, you look under the sofa cushion and…

A: (a) The amount of money deposited in checking account is $50 and the required reserve is 20%. The…

Q: The graph shows the demand curve for bank reserves, RD. The current quantity of reserves supplied is…

A: A demand curve, assuming that all other factors are constant, is a graphic representation showing…

Q: If the Fed wants to increase the money supply by $100 million does it have to buy more than $100…

A: The economies tend to have two major policy makers, the government, and the central banking system.…

Q: When the Fed buys government bonds, a- the money supply decreases and the federal funds rate…

A: Open market operation refers to the purchasing and selling of government bonds in the market. Open…

Q: The graph shows the demand curve for bank reserves, RD. The current quantity of reserves supplied is…

A: At point 1, the current reserves supplied is $20 billion at which the federal funds rate = 5% Now,…

Q: Which of the following is the most accurate description of events when monetary authorities increase…

A: Which of the following is the most accurate description of events when monetary authorities increase…

Q: Assuming that banks lend all of their access reserves and people deposit all of their money, what…

A: The central bank can affect the money supply by changing its monetary policy. The sale and purchase…

Q: The graph shows the demand curve for reserves in the market for bank reserves. 8.00- Federal funds…

A: Detailed explanation:Since the Fed aims to achive the federal funds target rate of 4 percent, the…

Q: If there is a recession, the Fed would most likely encourage banks to provide loans by: a. buying…

A: Recession is described as the period in the economy in which the level of output falls. In such a…

Q: If the Fed wants to increase the money supply it will buy bonds. True False

A: Bonds are units of corporate securities that are securitized as tradeable assets and issued by…

Q: When the Fed increases the money supply, we expect a. interest rates and stock prices to rise.…

A: When Fed increases the money supply, we expect interest rate to fall and stock price to rise. That…

Q: "he figure given below shows equilibrium in a money market. Which of the following will be observed…

A: The money market consists of demand for money by the people and the overall supply of money by the…

Question

Which of the following lists two things that both increase the money supply?

a. The Fed buys bonds and raises the discount rate

b. The Fed buys bonds and lowers the discount rate

c. The Fed sells bonds and raises the discount rate

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

When the Fed increases the money supply, we expect a. interest rates and stock prices to rise. b. interest rates to fall and stock prices to rise. c. interest rates to rise and stock prices to fall. d. interest rates and stock prices to fall.
12 MD 240 Quant ity of money 160 200 100 120 140 Ouantity of investment Refer to figure above to answer this question. If the money supply is equal to 180, what are the values of the interest rate and investment spending? 12 percent and 110. 12 percent and 120. 4 percent and 150. 8 percent and 130. 10 percent and 120. Rate ol interest
if the fed raise the reserve requirment on deposit from 15% to 20%, what would happen to the money supply? a. it would increase b. it would remain unchanged c, it depends on the value of interest rates d, it would decrease
Money market equilibrium depends on what the central bank targets. How does the money market adjust to the equilibrium? If the central bank targets _______. A. the short-term interest rate, the quantity of money demanded adjusts B. the quantity of money demanded, the short-term interest rate adjusts C. the monetary base, the quantity of money supplied adjusts D. the quantity of money, the short-term interest rate adjusts
When the Fed lowers the federal funds rate target and buys bonds, what happens to short-term interest rates and the monetary base? A. short-term interest rates fall; the monetary base increases B. short-term interest rates fall; the monetary base decreases C. short-term interest rates rise; the monetary base increases D. short-term interest rates rise; the monetary base decreases
Draw a graph of the money market. Show the effect on the money demand curve, the money supply curve, and the equilibrium short-term nominal interest rate of each of the following: a. The Fed decreases the money supply. b. A recession causes real GDP to fall. c. The price level increases. d. The Fed increases the money supply at the same time that the price level falls.
Assume that there is an increase in perceived bankruptcy risk. As a result of this we would expect to see a. money demand and interest rates to rise. b. income and interest rates to rise. c. money demand and interest rates to fall. d. money supply to rise and interest rates to fall.
When the Fed buys government bonds, the money supply increases and the federal funds rate increases. a. Cn the money supply increases and the federal funds rate decreases. the money supply decreases and the federal funds rate increases. C. the money supply decreases and the federal funds rate decreases. d. O O O
The money market in the United States and the investment demand curve are as shown in the graphs below. Currently, the Federal Reserve has a money supply of $40 billion and the money market is in equilibrium. a. Suppose the Federal Reserve increases the money supply by $20 billion. Use the money market and investment demand graphs to show the effects of the increase in the money supply on interest rates, money demand, and investment. Instructions: In the money market graph, use the tool provided 'MS,1' to draw a new money supply curve. Plot only the endpoints of the line (2 points total). Use the tool provided 'New Equilibrium' to plot a new equilibrium interest rate.
When the Fed buys government bonds, a- the money supply decreases and the federal funds rate increases. b- the money supply decreases and the federal funds rate decreases. c- the money supply increases and the federal funds rate decreases. d- the money supply increases and the federal funds rate increases.
Why does the Fed not target the quantity of money? The Fed does not target the quantity of money because _______. A. the Fed believes that it does not have enough control over the quantity of money because it is the banks that determine the quantity of loans and deposits B. the Fed believes that the quantity of money should remain constant C. Congress has passed laws that disallow this action by the Fed D. the Fed believes that if it changed the demand for money, the interest rate would fall and the growth of aggregate demand would slow down E. the Fed believes that the demand for money is too unstable
5- Interest rate (percent per year). 4- 3+ 2.8 MD 3.2 2.9 3.0 3.1 Real money (trillions of 2009 dollars) >>> Draw only the objects specified in the question. Q