Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non-bank public,...

Question

Question

Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non-bank public,...

Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non-bank public, who then deposits the compensation in their checking account. As a result, ______ will increase by $130 million and so, the monetary base will rise by ______.

Group of answer choices

A) currency in circulation; by more than $130 million

B) currency in circulation; exactly $130 million

C) reserves; by more than $130 million

D) reserves; exactly $130 million

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Answer

Option D
D) reserves; exactly $130 million

The deposits of $130 million increase the reserves by $130 million.

Monetary base =reserves + currency

so the monetary base increases by the same amount and that is $130 million

Add a comment

Answer 2

Similar Homework Help Questions

Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non- bank...

Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non- bank public, who then deposits the compensation in their checking account. As a result, will increase by $130 million and so, the monetary base will rise by currency in circulation; by more than $130 million currency in circulation, exactly $130 million reserves; by more than $130 million reserves; exactly $130 million
D1. Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non-...

D1. Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non- bank public, who then deposits the compensation in their checking account. As a result, will increase by $130 million and so, the monetary base will rise by_ currency in circulation; by more than $130 million currency in circulation; exactly $130 million reserves; by more than $130 million reserves; exactly $130 million
If the Federal Reserve Bank sells $130 million worth of securities to a commercial bank, then the reserves in the econom...

If the Federal Reserve Bank sells $130 million worth of securities to a commercial bank, then the reserves in the economy ____ by $130 million and the monetary base ____ by $130 million. Group of answer choices decrease; decreases decrease; increases increase; decreases increase; increases

If the Federal Reserve Bank sells $45 million worth of securities to a commercial bank, then the ______ in the economy w...

If the Federal Reserve Bank sells $45 million worth of securities to a commercial bank, then the ______ in the economy will ______ by $45 million. Group of answer choices A) reserves; increases B) reserves; decrease C) currency in circulation; descrease D) currency in circulation; increase
If the Federal Reserve Bank purchases $120 million worth of securities in the open market, then...

If the Federal Reserve Bank purchases $120 million worth of securities in the open market, then the monetary base will Group of answer choices The monetary base will decrease by exactly $120 million The monetary base will increase by exactly $120 million The monetary base will increase by more than $120 million The monetary base will decrease by less than $120 million
-0- If the Federal Reserve Bank sells $45 million worth of securities to a commercial bank,...

-0- If the Federal Reserve Bank sells $45 million worth of securities to a commercial bank, then the __in the economy will by $45 million. reserves, increases reserves, decrease currency in circulation; descrease currency in circulation; increase Question 4 1 pts Using the simply money multiplier model, what quantity of securities must the Federal Reserve purchase to generate an increase in the size of checkable deposits by $22,500, assuming the required reserve ratio is 4%? 810 aso

D3. If the Federal Reserve Bank sells $45 million worth of securities to a commercial bank,...

D3. If the Federal Reserve Bank sells $45 million worth of securities to a commercial bank, then the in the economy will _ by $45 million. reserves; increases reserves; decrease currency in circulation; descrease currency in circulation; increase
If the Federal Reserve buys $40,000 worth of securities from the non-bank public, and the non-bank...

If the Federal Reserve buys $40,000 worth of securities from the non-bank public, and the non-bank public then deposits the payment in their bank account, what happens next? a)R increases by $40,000 and the MB rises by $40,000 b)C and R both increase by $40,000, and MB increases by $80,000 c)C increases by $40,000 and the MB increases by $40,000 d)C decreases by $40,000 and the MB increases by $40,000
What will happen to the monetary base if the Federal Reserve Bank purchases $11 million in...

What will happen to the monetary base if the Federal Reserve Bank purchases $11 million in securities from the non-bank public? O The monetary base will decrease by exactly $11 million O The monetary base will increase by more than $11 million O The monetary base will decrease by more than $11 million O The monetary base will increase by exactly $11 million

Suppose that the Federal Reserve Bank buys $21,100 worth of securities and then, as a result,...

Suppose that the Federal Reserve Bank buys $21,100 worth of securities and then, as a result, total size of checkable deposits in the economy increase by $422,000. In this case, the required reserve ratio must be o 2% O 5% 0 7.5% 0 9.5%

Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non-bank public,...

Homework Answers

Add Answer to:
Suppose that the Federal Reserve Bank buys $130 million worth of securities from the non-bank public,...

Post as a guest

Earn Coins