Natwest Government Banking Service Branch Address, Feels Like A Rubber Band Around My Finger, Articles C

Raise reserve requirements 3. This problem has been solved! b. decrease the money supply and decrease aggregate demand. d) borrow reserves from the Federal Reserve. A change in the reserve requirement is the tool used least often by the Fed because it: Can cause abrupt changes in the money supply. c) decreases government spending and/or raises taxes. Monetary policy can help the Federal Reserve System to protect, influence, and increase benefits to the economy. When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again. lower reserve requirements.I and III onlyCurrently the Fed sets monetary policy by targetingthe Fed funds rate From October 1983 . Changing the reserve requirement is expensive for banks. Free . It needs to balance economic growth. Any import duty paid to the French authorities is a deductible expense for calculating French income taxes. One HEADLINE article in the text has the title "Fed cuts key interest rate half-point to 1 percent." a. increase the supply of bonds, thus driving up the interest rate. a. contractionary; buying b. expansionary; buying c. expansionary; selling d. contractionary; selling, Suppose the Federal Reserve conducts an open market purchase of $10 million worth of securities from a bank. Suppose the Federal Reserve buys government Open market operations versus discount loans Consider an expansionary open market operation. What are some basic monetary policy tools used by the Fed? $$ D. the buying and selling of stocks i, Suppose again that Third National Bank has reserves of $20,000 and check able deposits of $100,000. Assume the Federal Reserve decides to sell $25 billion worth of U.S. Treasury bonds i. All persons over age 16 who are either working for pay or actively seeking paid employment refers to: Who is an example of a part of the labor force? B. fewer reserves and inc, Suppose you read in the paper that the Fed plans to reduce money supply. Acting as fiscal agents for the Federal government. c. an increase in the demand for bonds and a rise in bond prices. Suppose Alan receives a check for $300 from a bank in Dallas, He deposits the check in his account at his Baltimore ban of the following is Alan's Baltimore bank likely to collect the $300 from? Ceteris paribus, if the Fed raises the reserve requirement, then: The lending capacity of the banking system decreases. \end{array} are the minimum amount of reserves a bank is required to hold. C) Total deposits decrease. b. will cause banks to make more loans. Now suppose the Fed conducts an open market purchase of government bonds equal to $1, Fiscal policy is conducted by: a. See Answer Ceteris paribus, if the Fed raised the required reserve ratio: Expert Answer If the Open-Market Committee of the Federal Reserve sells securities, this action tends to: a. decrease the money supply. Q01 . Answer the question based on the following balance sheet for the First National Bank. (A) How will M1 be affected initially? The key decision maker for general Federal Reserve policy is the: Free . }\\ D. Decrease the supply of money. If Bank A and all the other banks use reserves to purchase only securities, what will happen to deposits in the banking system and how much does it expand? b. the same thing as the long-term growth rate of the money supply. d. The Federal Reserve sells bonds on the open market. C. decrease interest rates. Conduct open market purchases. Money demand c. Investment spending d. Aggregate demand e. The equilibrium level of national income, When the expected inflation rate falls, the real cost of borrowing ______ and bond supply ______, everything else held constant. a) decrease, downward b) decrease, upward c) inc. a. decrease, downward. d. the U.S. Treasury. b. the interest rate increases c. the Federal Reserve purchases bonds. d. lend more reserves to commercial banks. According to macroeconomists, a goal for the economy is a: When the unemployment rate falls to the full-employment level: There is increased concern about inflation. Compute the following for the current year: Assume that the Fed increases the monetary base by $1 billion when the reserve requirement is 1/7. What can be used to shift aggregate demand? If total reserves for a bank are $10,000, excess reserves are zero, and demand deposits are $100,000, then the money multiplier must be: If total reserves for a bank are $150,000, excess reserves are zero, and demand deposits are $1,000,000, then the money multiplier must be: Suppose the entire banking system has $10 million in excess reserves and a required reserve ratio of 5 percent. If the Fed uses open-market operations, should it buy or sell government securities? What types of accounts are listed on the post-closing trial balance? If the Fed wishes to increase the money supply it can: The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is referred to as: If the Fed wants to increase bank reserves, it can: If the Fed wants to reduce bank reserves, it can: Raise the discount rate or sell bonds on the open market. \text{Variable manufacturing cost per chainsaw} & \text{\$100}\\ This causes excess reserves to, the money supply to, and the money multiplier to. If the population of a country is 1,000,000 people, its labor force consists of 600,000, and 60,000 people are unemployed, the unemployment rate is: If the population of a country is 220 million people, its labor force consists of 115 million, and 99 million people are employed, the unemployment rate is: When construction workers seek work because the ground is covered in snow and ice, the unemployment rate goes up. D. open bonds operations. Which action would the federal reserve rate take to expand the money supply and lower the equilibrium interest rate? D. All of the above. A change in the reserve requirement is the tool used least often by the Fed because it: * Can cause abrupt changes in the money supply. a. increases, rises b. increases, falls c. decreases, falls d. decreases, does not change e. . D. The money multiplier decreases. Keynes viewed the economy as inherently unstable and suggested that during a recession policy makers should: Cut taxes and/or increase government spending. Explore how the Federal Reserve uses monetary policies to control the money supply and affect interest rates in an effort to prevent another depression from occuring. What impact would this action have on the economy? If there is a recession, the Fed would most likely a. encourage banks to provide loans by. b. a. increase, increase, sell b. increase, increase, buy c. decrease, decrease, buy d. decrease, If the Fed is following policies to reduce inflation, it is most likely to be: a. lowering interest rates b. raising the money supply c. lowering the money supply d. both lowering interest rates and, When the interest rate falls in the money market, the quantity of money demanded ______ and the quantity of money supplied _______. Suppose the banks in the Federal Reserve System have $400 million in transactions accounts and the reserve requirement is 0.10. The aggregate demand curve should shift rightward. B. the sellers of such securities buy new securities in the open market and t. Assume there is no leakage from the banking system and that all commercial banks are loaned up. c. the money supply is likely to increase. According to the monetarist view, the aggregate supply curve is: Vertical at the natural rate of unemployment. \text{French import duty} & \text{20\\\%}\\ If a market basket of goods cost $100 in the base year and $110 in a later year, then average prices have increased by: Keynes and classical economists disagree about whether: Government intervention should be used to correct business cycles. Its policymakers are welcoming the recent slowdown in price increases, and the disinflation trend gives . B. excess reserves at commercial banks will decrease. d. The Federal Reserve sells bonds on the open marke, If the Fed purchases government securities on the open market, the quantity of money and the nominal interest rate. copyright 2003-2023 Homework.Study.com. Make sure you say increase or decrease/buy or sell. c) overseeing the buying and selling of government securities in the open market. An office worker who loses her job because she does not have the necessary computer skills is, ceteris paribus: Which of the following is likely to reduce the level of structural unemployment? b. The VOC was also the first recorded joint-stock company to get a fixed capital stock. Change in Excess Reserve = -100000000. Which transfer prices should the Burton Company select to minimize the total of company import duties and income taxes? c. Decrease interest rates. An increase in the money supply: A. lowers the interest rate, causing a decrease in investment and an increase in GDP B. lowers the interest rate, causing an increase in investment and a decrease in GDP C. lowers the interest rate, causing an increase in, If there is a negative supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action: a. lowers both inflation and unemployment. When the Fed buys bonds in open-market operations, it _____ the money supply. Ceteris paribus, if the Fed reduces the reserve requirement, then, the lending capacity of the banking system increases, Ceteris paribus, if the Fed reduces the discount rate, then. Is it mandatory for banks to buy gov't bonds during open-market operations by the Central Bank? The Federal Open Market Committee is responsible for: a) reducing the Fed's reliance on open market operations. &\textbf{past due}&\textbf{past due}&\textbf{past due}\\[5pt] a. decrease b. increase c. not change, If the economy experiences an expansionary gap and the Fed sells US government securities in the open market, then ______. Increase the reserve requirement C. Buy government securities D. Decrease the discount rate, When the Fed successfully decreases the money supply, GDP options: a. increases because the resulting increase in the interest rate leads to a decrease in investment b. increases because the resul, If the Fed wants to raise the interest rate, in the short run in the money market, the Fed: a) decreases the quantity of money b) increases the quantity of money c) shifts the demand for money curve leftward d) shifts the demand for money curve rightward, The Federal Reserve is becoming more cautious about rising inflationary pressure. b. lowers inflation but raises unemploym, Assume the demand for money curve is stationary and the Fed increases the money supply. c. the government increases spending and lowers taxes. A perfectly competitive firm is a price taker because: It has no control over the market price of its product. C. $120,000 in checkable-deposit liabilities and $32,000 in reserves. Perform open market purchases of securities. An easing of monetary policy interest rates, which the demand for a currency and the fundamental value of the exchange rate. B. decisions by the Fed to increase or decrease the money multiplier. D. In open market operations, the Fed exchanges cash (money) for non-cash (bonds). \end{array} Assume a fixed demand for money curve and the Fed decreases the money supply. A) remains unchanged; decreases B) increases; decreases C) decreases; increases D) increases; remains unchanged E) rem, A decrease in the discount rate: a. Decreases the money supply, b. a. C. The value of the dollar will decrease in foreign exchange markets. When the Fed raises the reserve requirement, it's executing contractionary policy. c. first purchase, then sell, government secur, If the Fed wants to decrease the money supply by $5,000, the Fed will use open market operations to _____ worth of U.S. government bonds. The Treasury buys bonds in the open market c. The Fed reduces reserve requirements d. The Treasury sells b. Professor Williams tutors her next-door neighbor's son in economics. Was there a profit or a loss for the year ended December 31, 2012? Which of the following indicates the appropriate change in the U.S. economy? The bank now sells $5,000 in securities to the Federal Reserve Bank in its, When the Federal Reserve purchases Treasury securities in the openmarket, A. the public starts buying houses and firms invest in anticipation of banks increasing their reserves. The number and relative size of firms in an industry. Road Warrior Corporation began operations early in the current year, building luxury motor homes. The difference between price and average total cost multiplied by the quantity sold. What happens to interest rates? The velocity of money is a. the rate at which the Fed puts money into the economy. c. it borrows money, Consider how the following scenario would affect the money supply and, as a result, interest rates in the economy. C. sell bonds lowering the, If The Fed decides to buy bonds & securities in the open market, it will likely: a. increase the money supply and decrease aggregate demand. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. Name the three tools of monetary policy that the Federal Reserve System can do to combat inflation. is the rate of interest charged by the Fed when it lends money to private banks, If a private bank lends money to another bank, the interest rate that is charged for the loan is the, Suppose the Fed decreases interest rates by half of a percent. c. state and local government agencies only. Conduct open market sales of government bonds. C. the Fed is seeking, All else equal, if the Federal Reserve decreases the money supply, interest rates will _ and the dollar will _ against other currencies. The number of deposit dollars the banking system can create from $1 of excess reserves. Suppose the Federal Reserve decided to sell $35 billion worth of government securities in the open market. b) increases, so the money supply decreases. The Federal Reserve expands the money supply by 5 percent. The change is negative it means that excess reserve falls by -100000000 or 100 million. a) decreases, decreases b) decreases, increases c) increases, decr, An increase in the interest rate will cause: an increase in the demand for money an increase in the supply of money a decrease in the demand for money a decrease in the quantity demanded of money, When the Federal Reserve increases the money supply and expands aggregate demand, it moves the economy along the Phillips curve to a point with (blank) inflation and (blank) unemployment. b) an open market sale and expansionary monetary policy. C. increase by $290 million. The reserve ratio is 20%. The Fed sells Treasury bills in the open market b. 3. The equilibrium price level and equilibrium output should both increase. b. b. How can you tell? In a graph of the aggregate demand curve, an increase in investment by businesses is represented by a: Ceteris paribus, which of the following changes in the aggregate demand curve best characterizes a cutback in exports? Assume the required reserve ratio is 10 percent and the FOMC orders an open market sale of $50 million in government securities to banks. b. a. use open market operations to buy Treasury bills b. use open market operations to sell Treasury bills c. use discount policy to raise the disc. The Federal Reserve (the Fed), the central bank of the United States, has a Congressional mandate to promote maximum employment and price stability. By raising or lowering the _______, the Fed changes the cost of money for banks, which impacts the incentive to borrow reserves. Decrease the price it asks for the bonds. B. purchases government bonds to decrease the money supply. Raise discount rate 2. Issuanceofstock. Cashdividends. U.S.incometaxrateontheU.S.divisionsoperatingincome, FrenchincometaxrateontheFrenchdivisionsoperatingincome, Sellingprice(netofmarketinganddistributioncosts)inFrance, Alexander Holmes, Barbara Illowsky, Susan Dean, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer, Don Herrmann, J. David Spiceland, Wayne Thomas. d. raise the treasury bill rate. d. commercial bank, Assume all money is held in the form of currency. Increase the reserve requirement. All other trademarks and copyrights are the property of their respective owners. Bob, a college student looking for summer work.