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
Homework Answers
Answer
The correct answer is (b) The monetary base will increase by exactly $120 million.
Monetary Base = C + R where C = Currency and R = Total Reserves
Suppose, Federal Reserve Bank purchases $120 million worth of securities in the open market from a Bank. This will result in increase in Total reserves(R) by 120 million and there will be no change in C and thus Monetary base will increase by 120 million.
Suppose, Federal Reserve Bank purchases $120 million worth of securities in the open market from an individual(or more precisely non Bank). This will result in increase in Currency by 120 million and there will be no change in R and thus Monetary base will again increase by 120 million.
Thus, From wherever Federal reserve buys securities of 120 million. Monetary Base will increase by exactly 120 million.
Hence, the correct answer is (b) The monetary base will increase by exactly $120 million
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If the Federal Reserve Bank purchases $120 million worth of
securities in the open market, then...
During open market operations the Federal Reserve Bank purchases $120 million dollars worth of securities. The...
During open market operations the Federal Reserve Bank purchases $120 million dollars worth of securities. The estimate, using the simply multiplier model is that this will raise checkable deposits in the economy by $750 million. In this, the required reserve ratio is Group of answer choices A) 12% B) 16% C) 18% D) 20%
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
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
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
After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase the monetary...
After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase the monetary base by $120 million. In this case, the Fed can accomplish this goal by Group of answer choices A) purchasing less than $120 million in securities B) purchasing exactly $120 million worth of securities C) selling exactly $120 million worth of securities D) selling less than $120 million worth of securities
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
After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase the monetary base by $120 milli...
After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase the monetary base by $120 million. In this case, the Fed can accomplish this goal by purchasing less than $120 million in securities purchasing exactly $120 million worth of securities selling exactly $120 million worth of securities selling less than $120 million worth of securities
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
D 2. After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase...
D 2. After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase the monetary base by $120 million. In this case, the Fed can accomplish this goal by purchasing less than $120 million in securities purchasing exactly $120 million worth of securities selling exactly $120 million worth of securities selling less than $120 million worth of securities
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
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 $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
After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase the monetary base by $120 million. In this case, the Fed can accomplish this goal by purchasing less than $120 million in securities purchasing exactly $120 million worth of securities selling exactly $120 million worth of securities selling less than $120 million worth of securities
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
D 2. After a FOMC meeting, the Federal Reserve Bank concludes that they need to increase the monetary base by $120 million. In this case, the Fed can accomplish this goal by purchasing less than $120 million in securities purchasing exactly $120 million worth of securities selling exactly $120 million worth of securities selling less than $120 million worth of securities
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