Because ________ in the government budget deficit increase the real interest rate, budget deficits can ________...
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Because ________ in the government budget deficit increase the real interest rate, budget deficits can ________ firm investment.
decreases; increase
increases; decrease
decreases; decrease
increases; increase
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When banks gain ________, they can ________ their loans; and the money supply ________.
withdrawals; decrease; expands
reserves; increase; expands
withdrawals; increase; expands
reserves; increase; contracts
Homework Answers
increases; decrease
When there is an increase in budget deficit, demand for loanable funds increases. This puts a pressure on financial market to raise the rate of interest. As a result of higher cost of borrowing, some of the private investment declines
reserves; increase; expands
If there is an increase in the bank reserves, banks can use these reserves in generating more loans. This is likely to raise money supply
Add Answer to:
Because ________ in the government budget deficit increase the
real interest rate, budget deficits can ________...
6. Monetizing the deficit One of the major objections to government budget deficits is that they...
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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...
1. What is the short-run effect on the exchange rate of an increase in domestic real...
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10. The discount rate and the federal funds rate The discount rate is the interest rate...
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Agree or disagree (7 sentences) A budget deficit is when an individual, business, or government budgets...
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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...
Lowering the discount rate will A. decrease reserves, encourage banks to make fewer loans, and increase...
Lowering the discount rate will A. decrease reserves, encourage banks to make fewer loans, and increase the money supply. B. increase reserves, encourage banks to make more loans, and increase the money supply. C. decrease reserves, encourage banks to make fewer loans, and decrease the money supply. D. increase reserves, encourage banks to make more loans, and decrease the money supply.
The federal government is expected to raise debts because of the bailout program to save the...
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In some countries there is a concern that the government will run large budget deficits and...
In some countries there is a concern that the government will run large budget deficits and force the country’s central bank to “monetize the deficit” by purchasing government bonds and providing money to the government. The resulting increase in the money supply will then lead to high rates of inflation. Briefly explain why this is not a concern in Canada.
In some countries there is a concern that the government will run large budget deficits and...
In some countries there is a concern that the government will run large budget deficits and force the country’s central bank to “monetize the deficit” by purchasing government bonds and providing money to the government. The resulting increase in the money supply will then lead to high rates of inflation. Briefly explain why this is not a concern in Canada. (All information I have)
6. Monetizing the deficit One of the major objections to government budget deficits is that they may be inflationary. In addition, some worry that the Federal Reserve may monetize part of the deficit by buying some of the newly issued debt, potentially causing even more inflation. In general, a tax cut increases both real GDP and the price level, since it causes aggregate demand to increase. The following graph shows the demand and supply of bank reserves. Show the initial...
answer these will rate after
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The federal government is expected to raise debts because of the bailout program to save the big banks. Upon the announcement of the proposed program by the fed and the treasury, other things remain unchanged, the interest rate is expected to and therefore, the bond in the market now and the interest rate increase, demand, increases, decreases increase, supply, decreases, increases increase, demand, decreases, increases increase, supply, decreases, decreases decrease, demand, increases, decreases decrease, supply, decreases, increases decrease, demand, increases,...
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