Homework Answers
Q-1 Answer :- The money supply will decrease
Explanation :- when federal reserve bank make open Market sale then the amount from people are goes to federal banks so money supply in economy decrease.
Q-2 Answer :- The money supply will increase
Explanation :- if Federal reserve banks decrease the reserve ratio then the banks should maintain less amount as reserve so they lend more amount to people. so it will increase money supply in economy.
Q-3 Answer :- The money supply will increase
Explanation :- if FED drop the discount rate then the commercial banks borrow more money from FED so they have more money to lend to people. so that will increase money supply in economy.
Q-4 Answer :- -1.5%
Explanation :- Real interest rate = nominal interest rate - Inflation
= 2.5% - 4%
= -1.5%
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For questions 1-3 assume that the initial federal funds rate is 2.5%, the discount rate is...
10. The discount rate and the federal funds rate The discount rate is the interest rate...
10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate is the interest rate that banks charge one another...
To _____ the money supply, the Federal Reserve could _____. A. decrease; lower the discount rate...
To _____ the money supply, the Federal Reserve could _____. A. decrease; lower the discount rate B. increase; raise the federal funds rate C. increase; lower the reserve requirements D. decrease; conduct open-market purchases
10. The discount rate and the federal funds rate The discount rate is the interest rate...
10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate is the interest rate that banks charge one another...
10. The discount rate and the federal funds rate The discount rate is the interest rate...
10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to ipply to . The federal funds rate is the interest rate that banks...
9. The discount rate and the federal funds rate The discount rate is the interest rate...
9. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower spread between the discount rate and the federal funds rate decreases banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate...
36. The Federal Reserve System in the U.S. has the greatest control over a. The Federal...
36. The Federal Reserve System in the U.S. has the greatest control over a. The Federal Funds rate. b. The Discount rate. c. The consumer loan rate. d. All of the above e. None of the above 37. Suppose the U.S. Treasury issues and sells $100 million of U.S. government securities (bonds) to the public. How will this affect the money supply! the money supply will increase. b. the money supply will decrease. c. the money supply will be unaffected....
4. If nominal money demand doubles and the real money supply also does what happens to...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
Suppose that a fall in house prices decreases wealth substantially. (For simplicity, assume that the economy...
Suppose that a fall in house prices decreases wealth substantially. (For simplicity, assume that the economy begins in long-run equilibrium.) a. How will this change affect output in the short run? b. Suppose the Federal Reserve wants to prevent the impact you found in part (a). Should it increase the real interest rate, decrease it, or leave it unchanged (or is it not possible to tell)? c. How, if at all, should the Federal Reserve change the supply of money...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
Question 1 1 pts Suppose that in the market for reserves, the federal funds rate is...
Question 1 1 pts Suppose that in the market for reserves, the federal funds rate is both, less than the discount rate (iff < id), and above the rate paid on excess reserves (iff > Por). If the Federal Reserve Bank elects to decrease the required reserve ratio, then we would expect the_ curve for reserves to shift and the equilibrium interest rate to . O demand; fall O demand; rise o supply; rise O supply; fall
10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate is the interest rate that banks charge one another...
10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate is the interest rate that banks charge one another...
10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to ipply to . The federal funds rate is the interest rate that banks...
9. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower spread between the discount rate and the federal funds rate decreases banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate...
36. The Federal Reserve System in the U.S. has the greatest control over a. The Federal Funds rate. b. The Discount rate. c. The consumer loan rate. d. All of the above e. None of the above 37. Suppose the U.S. Treasury issues and sells $100 million of U.S. government securities (bonds) to the public. How will this affect the money supply! the money supply will increase. b. the money supply will decrease. c. the money supply will be unaffected....
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
Circle the best answer 1. The purchase of Treasury securities by the Federal Reserve will, in general, A) not change the money supply. B) not change the quantity of reserves held by banks. C) decrease the quantity of reserves held by banks. D) increase the quantity of reserves held by banks. Suppose, r0.10,0 $400 Billion, D-5800 Billion, EX.R- $0.8 billion MI-CD-$1200 Billion 2. Refere to above information, the mm (mony multiplier) is A) 1.5 B) 2.5 C) 2 D) 4...
Question 1 1 pts Suppose that in the market for reserves, the federal funds rate is both, less than the discount rate (iff < id), and above the rate paid on excess reserves (iff > Por). If the Federal Reserve Bank elects to decrease the required reserve ratio, then we would expect the_ curve for reserves to shift and the equilibrium interest rate to . O demand; fall O demand; rise o supply; rise O supply; fall
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