Commercial banks set interest rates as a mark-up over the interest rates charged to them by...
Commercial banks set interest rates as a mark-up over the interest rates charged to them by the central bank. For which of the theories below is the statement above correct?
A. Mainstream economics
B. Post-Keynesian economics
C. Both
D. Neither
Homework Answers
C. Both
Explanation: Both mainstream economics and post-keynesian economics support this.
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Commercial banks set interest rates as a mark-up over the
interest rates charged to them by...
Suppose that the interbank loan rate, which is the interest rate that commercial banks charge each...
Suppose that the interbank loan rate, which is the interest rate that commercial banks charge each other, goes up and approaches the overnight lending rate of the central bank. What action does the central bank likely to take in this case? What are the policy instrument(s) to implement?
Which of the following factors pose a limit on the ability of commercial banks to increase...
Which of the following factors pose a limit on the ability of commercial banks to increase the quantity of money in circulation by extending new loans? Select one or more: a. the quantity of Central Bank reserves that they own b. the quantity of money that savers lent to them by opening deposits c. the behavior of households and firms, which reduce the quantity of money in circulation by repaying previous loans. d. the availability of profitable lending opportunities in...
Fill in the blanks to make the following statements correct. a The interest rate that commercial...
Fill in the blanks to make the following statements correct. a The interest rate that commercial banks charge each other for overnight loans is called the overnight interest rate. b. The bank rate is 50 basis points above the target overnight interest rate. At this interest rate, the Bank stands ready to lend any amount to commercial banks. At a rate 50 basis points below the target, the Bank stands ready to accept deposits from commercial banks (and pay that...
1. Why was the Federal Reserve System set up with twelve regional Federal Reserve Banks, rather...
1. Why was the Federal Reserve System set up with twelve regional Federal Reserve Banks, rather than one central bank as in other countries? 2. Which entities in the Federal Reserve System control the discount rate? Reserve requirements? Open market operations? 3. In what ways can the regional Federal Reserve Banks influence the conduct of monetary policy? 4. How is the president of the United States able to exert influence over the Federal Reserve?
I. In a regression analysis of banks, four types of banks were involved, namely, commercial banks,...
I. In a regression analysis of banks, four types of banks were involved, namely, commercial banks, mutual banks, community banks and savings banks. In this study, Y is the previous year's profit (in millions of dollars), X, is the size of the bank (in millions of dollars) and type of bank = X, X, X, which are indicator variables as coded below. Type of Bank X X X , Commercial 1 0 Mutual Community Savings 0 0 0 The first-order...
PART A Answer ALL Questions on the Multiple Choice Answer Sheet worth 1 mark (To M...
PART A Answer ALL Questions on the Multiple Choice Answer Sheet worth 1 mark (To M 1. Which of the following statements about checking deposits is true? A. They are a liability for both households and banks. B. They are an asset for households but a liability for a bank. C. They are a liability for households but an asset for a bank. D. They are an asset for both households and banks 2. "A bank that expects interest rates...
Initially, the Republic of Gorgonzola has no commercial banking system. To make trading easier and eliminate...
Initially, the Republic of Gorgonzola has no commercial banking system. To make trading easier and eliminate the need for barter, the government directs the central bank of Gorgonzola to put into circulation 5 million identical paper notes, called guilders. The central bank prints the guilders and distributes them to the people. At this point the Gorgonzolan money supply is 5 million guilders In order to keep the money safe, some Gorgonzolan entrepreneurs set up a system of commercial banks. When...
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...
All of the statements below are not false, except: 1. Changes in interest rates represent a...
All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both borrowers and investors because of diminishing investment prospects and increased cost of borrowing; II. Failure to pay accounts receivable on time by customers may have a significant negative impact on the capital base of a company; III. Companies involved in cross-border trades are subject to FX risks: IV. It is essential for banks to assess the creditworthiness of customers to mitigate...
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1)...
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The LM curve represents A) the single level of output where the goods market is in equilibrium. B) the combinations of output and the interest rate where the goods market is in equilibrium. C) the single level of output where financial markets are in equilibrium. D) the combinations of output and the interest rate where the money market is in equilibrium. E) none of...
Fill in the blanks to make the following statements correct. a The interest rate that commercial banks charge each other for overnight loans is called the overnight interest rate. b. The bank rate is 50 basis points above the target overnight interest rate. At this interest rate, the Bank stands ready to lend any amount to commercial banks. At a rate 50 basis points below the target, the Bank stands ready to accept deposits from commercial banks (and pay that...
1. Why was the Federal Reserve System set up with twelve regional Federal Reserve Banks, rather than one central bank as in other countries? 2. Which entities in the Federal Reserve System control the discount rate? Reserve requirements? Open market operations? 3. In what ways can the regional Federal Reserve Banks influence the conduct of monetary policy? 4. How is the president of the United States able to exert influence over the Federal Reserve?
I. In a regression analysis of banks, four types of banks were involved, namely, commercial banks, mutual banks, community banks and savings banks. In this study, Y is the previous year's profit (in millions of dollars), X, is the size of the bank (in millions of dollars) and type of bank = X, X, X, which are indicator variables as coded below. Type of Bank X X X , Commercial 1 0 Mutual Community Savings 0 0 0 The first-order...
PART A Answer ALL Questions on the Multiple Choice Answer Sheet worth 1 mark (To M 1. Which of the following statements about checking deposits is true? A. They are a liability for both households and banks. B. They are an asset for households but a liability for a bank. C. They are a liability for households but an asset for a bank. D. They are an asset for both households and banks 2. "A bank that expects interest rates...
Initially, the Republic of Gorgonzola has no commercial banking system. To make trading easier and eliminate the need for barter, the government directs the central bank of Gorgonzola to put into circulation 5 million identical paper notes, called guilders. The central bank prints the guilders and distributes them to the people. At this point the Gorgonzolan money supply is 5 million guilders In order to keep the money safe, some Gorgonzolan entrepreneurs set up a system of commercial banks. When...
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...
All of the statements below are not false, except: 1. Changes in interest rates represent a risk for both borrowers and investors because of diminishing investment prospects and increased cost of borrowing; II. Failure to pay accounts receivable on time by customers may have a significant negative impact on the capital base of a company; III. Companies involved in cross-border trades are subject to FX risks: IV. It is essential for banks to assess the creditworthiness of customers to mitigate...
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