Question 33 5 pts If the required-reserve ratio is 10 percent and the Fed buys $25 million worth of government bonds, the maximum potential change in the money supply will be a(n): increase of $250 million. increase of $25 million. decrease of $25 million. decrease of $250 million.
Money multiplier = 1/RR = 1/0.10 = 10
The Fed buys $25 million worth of government bonds , the maximum potential change in the money supply will be an increase of (10)($25 million) = $250 million. Hence,option(A) is correct.
Question 33 5 pts If the required-reserve ratio is 10 percent and the Fed buys $25...
answer these 4. will rate after Assume that the required reserve ratio is 20%. If the Federal Reserve buys $10 million worth of government bonds from the public, the maximum change in the money supply will be: more than 10 million. $2 million. O less than 10 million. o less than 2 million. Assume the reserve ratio is 25 percent and there are $40,000 in new deposits in the banking system. As a result, the money-creating potential of the commercial...
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
d. $200 reserve ratio is 5 percent and the bank has $1,000 in deposits. Its reserves amount to S5. S50. c. $95. d. $950 Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent. If you deposit $9,000 into First Jayhawk Bank, a. First Jayhawk's required reserves increase by $900. b. First Jayhawk will be able to lend out $8,100 c. First Jayhawk's assets and liabilities both will increase by...
Assume that the required reserve ratio is 15 percent and that SAMA sells SR3 million worth of government bonds to a costumer who pays with a check drawn on the Riyad Bank. we got money supply change by 20,000,0000 . What is the maximum change in the money supply that can result from this sale?
Question 25 (12 points) Suppose the required reserve ratio is 5%. If the Fed sells $50 million worth of Treasury bonds, what will happen to the money supply? Describe any calculations made to support your answer. Based on your answer above, what will happen to interest rates in the bond market? Explain in detail how you came up with this response. Based on your answers above, what will happen to the federal funds rate? Explain in detail how you came...
Suppose the required reserve ratio is 10%, excess-to-deposit ratio is 10%, and the currency-to-deposit ratio is 20%. If the Fed buys $50 million worth of securities, what will happen to the money supply? 7.
Question 4 If the Fed buys $1 million of bonds from the First National Bank, the required reserve ratio is 10% and an additional 10% of any deposit is held as excess reserves, what is the total increase in checkable deposits? (Hint: Use T-accounts to show what happens at each step of the multiple expansion process.)
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...
Problem 7: The Fed conducts $20 million open-market purchase of government bonds. If the required reserve ratio is 10 percent, what is the largest possible increase in the money supply that could result? Explain. What is the smallest possible increase? Explain.
1) Suppose the Fed's required reserve ratio (REQ) is 20%. Further suppose that the Fed buys $100 million of U.S. Treasury securities from a dealer, Mary Jones, who deposits the check, which is drawn on the Fed, in her bank. This deposit increases her bank's reserve account (∆R) with the Fed by $100 million as well as its demand deposits, its total reserves, and the overall level of M1. What is the money multiplier?1) Suppose the Fed's required reserve ratio...