OOOOOOOOOOWhich one of the following statements is FALSE?Select one:a. The prime bank rate is the rate banks charge their most credit-worthy commercial customers.b. The Fed can influence the supply of federal funds through open market operations.c. "Tight money" policies tend to increase the money supply growth rate.d. The Fed does not directly set the federal funds rate but instead tightly controls the rate through open market operations.e. The prime bank rate in the United States is consistently higher than the federal funds rate.In recessions, tax revenues tend to decline and transfer payments like unemployment insurance and food stamps tend to increase, sothese programs...Select one:a. are procyclical.b. make Aggregate Expenditures lessc. are automatic stabilizers.d. create budget surpluses during economic downturns.e. increase unemployment.

The monetary policy is the policy taken by a central bank of a country to curb inflation and…

Which one of the following statements is FALSE? Select one: D a. The prime bank rate is the rate banks charge their most credit-worthy commercial customers. D b. The Fed can influence the supply of federal funds through open market operations. D c. "Tight money" policies tend to increase the money supply growth rate. D d. The Fed does not directly set the federal funds rate but instead tightly controls the rate through open market operations. D e. The prime bank rate in the United States is consistently higher than the federal funds rate. In recessions, tax revenues tend to decline and transfer payments like unemployment insurance and food stamps tend to increase, so these programs... Select one: D D D c. are automatic stabilizers. D d. create budget surpluses during economic downturns. D e. increase unemployment. a. are procyclical. b. make Aggregate Expenditures less

Which one of the following statements is FALSE? Select one: D a. The prime bank rate is the rate banks charge their most credit-worthy commercial customers. D b. The Fed can influence the supply of federal funds through open market operations. D c. "Tight money" policies tend to increase the money supply growth rate. D d. The Fed does not directly set the federal funds rate but instead tightly controls the rate through open market operations. D e. The prime bank rate in the United States is consistently higher than the federal funds rate. In recessions, tax revenues tend to decline and transfer payments like unemployment insurance and food stamps tend to increase, so these programs... Select one: D D D c. are automatic stabilizers. D d. create budget surpluses during economic downturns. D e. increase unemployment. a. are procyclical. b. make Aggregate Expenditures less

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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M7
2. Outline the three monetary policy instruments the fed can implement if its objective is to cool off an economy suffering from high inflation.
Federal funds A. provide banks with an immediate infusion of reserves. B. are short-term funds transferred between financial institutions, usually for a period of one day. C. actually have nothing to do with the federal government. D. are all of the above..
Multiple choices 1. Banks face liquidity risk because A) they can have difficulty meeting their depositor's demands to withdraw money. B) they are unable to borrow from the Federal Reserve. C) households and businesses may seek to borrow a large amount of funds in a short period of time. D) governments tend to run high budget deficits. 2. The original intention of the Fed's role as lender of last resort was to make loans to banks that were A) not illiquid nor insolvent. B) illiquid, but not insolvent. C) insolvent, but not illiquid. D) both illiquid and insolvent. 3. Why might a nation seek to maintain a pegged exchange rate? A) It makes business planning easier for firms involved in the global economy. B) It removes the need to intervene in the foreign exchange market. C) It ensures that the exchange rate will remain at its equilibrium. D) It makes their currency more attractive on the foreign exchange market. 4. Suppose a country pegs its currency. If investors start to believe the…
When the Fed sells government securities, it: Group of answer choices raises the cost of borrowing from the Fed, discouraging banks from making loans to thegeneral public. lowers the cost of borrowing from the Fed, encouraging banks to make loans to thegeneral public. decreases the amount of excess reserves that banks hold, discouraging them from makingloans to the general public. increases the amount of excess reserves that banks hold, encouraging them to make loans tothe general public.
To counteract a recession, the Central Bank should A. raise the reserve requirement and the discount rate B. sell securities on the open market and raise the discount rate C. sell securities on the open market and lower the discount rate D. buy securities on the open market and lower the discount rate
Suppose that a bank does the following: a. Sets a loan rate on a prospective loan with BR = 8.04% and ϕ = 4.15%. b. Charges a 0.26 percent loan origination fee to the borrower. c. Imposes a 14 percent compensating balance requirement to be held as noninterest-bearing demand deposits. d. Holds reserve requirements of 9 percent imposed by the Federal Reserve on the bank’s demand deposits. Calculate the bank’s ROA on this loan. Note: Convert your answer to percentage format. Enter your answer rounded to 2 decimals, and without any units. So, for example, if your answer is 3.4568%, then just enter 3.46.
Establishing upper and lower limits for the federal funds rate enabled the Fed to A. buy financial assets to make ample reserves available. B. sell financial assets to limited the reserves available. C. buy financial assets to limited the reserves available. D. sell financial assets to make ample reserves available.
Which of the following actions by the Fed would cause interest rates to fall? A. Raising the discount rate B. Purchasing bonds from commercial bank C. Raising the reserve requirement D. None of the above
1. Which of the following would NOT cause a rise in the money supply (assume ceteris paribus)? A. An increase in government spending financed by borrowing from the central bank. B. The centFal bank imposes a reserve requirement (reserve ratio) on banks above their current ratio. C. A rise in demand for money and the central bank does not change interest rates. D. The central bank agreeing to swap toxic assets for cash (quantitative easing). E. All of the above.
25. Suppose the Fed conducts an open market sale. We can expect this transaction to A) reduce the money supply, increase bond prices, and lower interest rates. B) increase the money supply, lower bond prices, and lower interest rates. C) increase the money supply, raise bond prices, and lower interest rates. D) reduce the money supply, reduce bond prices, and increase interest rates. 26. If the economy experiences an inflationary gap, a contractionary monetary policy will A) increase real GDP and increase the price level. B) increase real GDP and decrease the price level. C) decrease real GDP and increase the price level. D) decrease real GDP and decrease the price level. 27. Suppose the economy experiences a recessionary gap. Expansionary monetary policy will A) increase interest rates and increase the bond prices. B) increase interest rates and decrease…
If the central bank buys bonds from the market with open market operations when the money market is in equilibrium and money demand is stable, which of the following developments will occur? a. Interest rate doesn't change b. Investments increase c. Interest rate decrease d. Interest rate increase