T F 5. Included on the FOMC of the FED is the Comptroller of the Currency....
T F 5. Included on the FOMC of the FED is the Comptroller of the Currency.
T F 6. The demand for loanable funds is supply of bonds, because
generally to
get someone will lend you money you give them a promise to
repay.
T F 7. A discount rate lower than the federal funds or market rate
expands the
money supply.
T F 8. If the excess reserve deposit ratio rises, then the money
supply rises
.
T F 9. If the interest rate rises, the price of fixed valued assets
like bonds falls.
T F 10. Financial markets only affect the participants in them.
Homework Answers
Answers-
Q 5) The statement is False
Q 6) The statement is True.
Q 7) The statement is True
Q 8) The statement is False
Q 9) The sateement is True
Q 10) The statement is False
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T F 5. Included on the FOMC of the FED is the Comptroller of the
Currency....
TF 1. Capital market assets are long term debt. T F 2. If the demand for...
TF 1. Capital market assets are long term debt. T F 2. If the demand for bonds rises, then so does the supply of bonds. T F 3. Financial markets are required for interest rates to exist. IF 4. All banks are always illiquid. T F 5. Included on the FOMC of the FED is the Comptroller of the Currency. TF 6. The demand for loanable funds is supply of bonds, because generally to get someone will lend you money...
Consider an open market purchase by the Fed of $11 billion of Treasury bonds. What is...
Consider an open market purchase by the Fed of $11 billion of Treasury bonds. What is the impact of the purchase on the bank from which the Fed bought the securities? The bank's securities (Click to select) by $11 billion and its reserves (Click to select) by $11 billion. Compute the impact on M1 assuming that: (1) the required reserve ratio is 5 percent; (2) the bank does not wish to hold excess reserves, and (3) the public does not...
Assume the Fed sells a $10m T-bill to First National Bank. a. Show the T-accounts of...
Assume the Fed sells a $10m T-bill to First National Bank. a. Show the T-accounts of the Fed and First National Bank. b. By how much will the monetary base change? c. If the reserve-deposit ratio is 15% and the currency-deposit ratio is 25%, calculate the eventual change in the money supply.
answer these will rate after If the Fed increases the discount rate, banks will face a...
answer these will rate after
If the Fed increases the discount rate, banks will face a higher cost of borrowing and will pass some of this cost onto customers in terms of higher interest rates. O it will be easier for banks to borrow the money needed to provide a higher volume of commercial loans. O it will then increase the required reserve ratio as well. O it will then decrease the required reserve ratio to offset any possible contractionary...
Discussion Questions for Tuesday, Apr. 23 1. Suppose the Fed conducts $10 million open market pur...
Discussion Questions for Tuesday, Apr. 23 1. Suppose the Fed conducts $10 million open market purchase from Bank A. If Bank A and all the other banks use reserves to purchase only securities, what will happen to deposits in the banking system and how much does it expand? 2. Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion and required reserve ratio is...
10. Open-market purchases of government bonds by the Fed will have the tendency to: A) Increase...
10. Open-market purchases of government bonds by the Fed will have the tendency to: A) Increase interest rates, the money supply, and national income. B) Increase interest rates and the money supply, but decrease national income. C) Increase interest rates, but decrease the money supply and national income. D) Decrease interest rates, but increase the money supply and national income. E) Decrease interest rates, the money supply, and national income. 11. Aggregate demand would tend to be shifted up by...
Describe how the Fed’s (the F.O.M.C’s-Federal Open Market Committee) manipulation of the fed funds target rate,...
Describe how the Fed’s (the F.O.M.C’s-Federal Open Market Committee) manipulation of the fed funds target rate, the overnight rate that Federal Reserve member financial intermediaries lend reserves to one another, affects the overall money supply (M1* = Currency in Circulation [C] plus Checkable Deposits [D]). Additionally, which monetary policy stabilization prescriptions would you recommend given that in short run, when wages and prices are sticky/rigid, the economy is running well below fully utilizing all of its factors of production?
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of...
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of the following curves would this quota shift? a. supply of loanable funds left b. demand for loanable funds left c. demand for Canadian dollars right d. supply of Canadian dollars left 8. Suppose the Canadian government imposed import quotas on agricultural products. According to the foreign-currency exchange market diagram, which of the following outcomes would most likely result? a. Both the demand and supply curves...
The Fed decides to buy $50 million in bonds. A. Show the initial T-account at the...
The Fed decides to buy $50 million in bonds. A. Show the initial T-account at the bank when this gets deposited. B. If the Reserve Requirement is 25%, show the T-account after the first loan is made. C. What is the maximum amount the money supply could expand by from this purchase. Show the T-account if the maximum number of loans and deposits is made. D. Show the affect of the change in the Money Market (your numbers don’t have...
1. When the government increases spending by issuing more bonds, it causes: a) nations currency to...
1. When the government increases spending by issuing more bonds, it causes: a) nations currency to appreciate b)exports increase c)interest rates decrease d)demand for loanable funds decrease e)decreases merchandise trade deficit 2. When the Fed decreases money supply to combat inflation, it cuases: a)the price of the U.S. dollar to decrease b) capital to flow out of the US c)an increase in the merchandise trade deficit d)an increase in private spending e) a decrease in the interest rates 3. Which...
TF 1. Capital market assets are long term debt. T F 2. If the demand for bonds rises, then so does the supply of bonds. T F 3. Financial markets are required for interest rates to exist. IF 4. All banks are always illiquid. T F 5. Included on the FOMC of the FED is the Comptroller of the Currency. TF 6. The demand for loanable funds is supply of bonds, because generally to get someone will lend you money...
Consider an open market purchase by the Fed of $11 billion of Treasury bonds. What is the impact of the purchase on the bank from which the Fed bought the securities? The bank's securities (Click to select) by $11 billion and its reserves (Click to select) by $11 billion. Compute the impact on M1 assuming that: (1) the required reserve ratio is 5 percent; (2) the bank does not wish to hold excess reserves, and (3) the public does not...
Assume the Fed sells a $10m T-bill to First National Bank. a. Show the T-accounts of the Fed and First National Bank. b. By how much will the monetary base change? c. If the reserve-deposit ratio is 15% and the currency-deposit ratio is 25%, calculate the eventual change in the money supply.
answer these will rate after
If the Fed increases the discount rate, banks will face a higher cost of borrowing and will pass some of this cost onto customers in terms of higher interest rates. O it will be easier for banks to borrow the money needed to provide a higher volume of commercial loans. O it will then increase the required reserve ratio as well. O it will then decrease the required reserve ratio to offset any possible contractionary...
Discussion Questions for Tuesday, Apr. 23 1. Suppose the Fed conducts $10 million open market purchase from Bank A. If Bank A and all the other banks use reserves to purchase only securities, what will happen to deposits in the banking system and how much does it expand? 2. Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion and required reserve ratio is...
10. Open-market purchases of government bonds by the Fed will have the tendency to: A) Increase interest rates, the money supply, and national income. B) Increase interest rates and the money supply, but decrease national income. C) Increase interest rates, but decrease the money supply and national income. D) Decrease interest rates, but increase the money supply and national income. E) Decrease interest rates, the money supply, and national income. 11. Aggregate demand would tend to be shifted up by...
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