If a bond dealer sells a government bond to the Fed for $100,000, and the reserve ratio is 10 percent, then the bank that receives a $100,000 deposit from the dealer can expand its loans by ________, and the money supply can increase by as much as ________.
A. $90,000; $900,000
B. $80,000; $800,000
C. $10,000; $100,000
D. $90,000; $1,000,000
If a bond dealer sells a government bond to the Fed for $100,000, and the reserve...
The reserve ratio is 10 percent. If the Fed buys $1 million of U.S. government securities from a bond dealer by transmitting the funds to the dealer's deposit account at Bank ABC, then A. Bank ABC can make additional loans up to $900,000. B. Bank ABC cannot make any additional loans, but the system as a whole can make additional loans up to $1 million. C. Bank ABC can make no additional loans. D. Bank ABC can make additional loans...
1.The Fed purchases $100,000 of U.S. government securities from One Bank. Assuming the desired reserve ratio is 10 percent, banks loan all excess reserves, and the currency drain is 20 percent, how much does the quantity of money increase? A. $1,000,000 B. $10,000,000 C. $1,100,000 D. $900,000 E. $100,000 2.A bank maximizes its stockholders' wealth by ______. A. colluding with other banks to keep interest rates high colluding with other banks to keep interest rates high B. lending for long...
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...
When the Federal Reserve conducts open market operations, it buys or sells government bonds. buys and sells foreign currency. manipulates of the rate at which it loans to member banks. increases or decreases the required reserve ratio. How will the Fed's policy action change the money supply? Use only the actions corresponding to your choice in the previous part. The money supply increases The money supply decreases Answer Bank Answer Bank The Fed sells foreign currency The Fed buys bonds...
The Fed conducts an open market sale of bonds. $50 million and the reserve ratio is 20% and after the sale. a. Does the money supply INCREASE or DECREASE? (circle) b. How much does the money supply change? 9. Suppose a country has a 100% reserve requirement for all banks. a. How much does the money supply change from a deposit of $100 by a housen b. What is the role of banks in moving funds from depositors to borrowers?...
Given that the required reserve ratio is 25%. If the Fed sells $5 million worth of government securities to the Bank of America, the change in the money supply will, at most, be
When a primary dealer sells a government bond to the Federal Reserve, reserves in the banking system ________ and the monetary base ________, everything else held constant. increase; decreases increase; increases decrease; decreases decrease; increases
1.If you deposit $100 in a bank account and the reserve ratio is 20 percent. a.What is the minimum amount of money banks will be required to keep in reserves? How much loans can banks make at most? What is the money multiplier? How much money can be created from $100 of reserves? b.If the fed raises the required reserve ratio to 30 percent. What is the minimum amount of money banks will be required to keep in reserves? How...
Question 6 The Federal Reserve System is under the strict control ofQuestion 6 options:the executive branchthe legislative branchthe judicial branchthe International Monetary Fundnone of the aboveQuestion 7 The Fed typically increases the money supply byQuestion 7 options:selling government bondsbuying government bondsselling government loansprinting more currencybuying government loansQuestion 8If the Federal Reserve wishes to increase the money supply by $30,000 and the reserve requirement ratio is 0.4, how big a purchase of bonds will the Fed need to makeQuestion 8 options:$75,000$12,000$1,000$30,000$3,000Question 9The Federal...
3. If you deposit $400 in a bank account and the reserve ratio is 20 percent. a. What is the minimum amount of money banks will be required to keep in reserves? How much loans can banks make at most? What is the money multiplier? How much money can be created from $400 of reserves? b. If the fed raises the required reserve ratio to 30 percent. What is the minimum amount of money banks will be required to keep...