ceteris paribus, if the fed raises the reserve requirement, then:

Suppose that the Fed purchases from bank B some bonds in the open market and that, before the sale of bonds, bank B had no excess reserves. Total reserves increase.B. The Fed's decision amounted to a shift to a more cautious period of inflation fighting. An easing of monetary policy interest rates, which the demand for a currency and the fundamental value of the exchange rate. In order to decrease the money supply, the Fed can. If the Federal Reserve increases the money supply, ceteris paribus, the: a. rate of interest is unaffected. d. the average number of times per year a dollar is spent. When the Fed buys bonds in open-market operations, it _____ the money supply. The aggregate demand curve is downward sloping because, ceteris paribus: People are willing and able to buy more goods and services at lower average prices. c. When the Fed decreases the interest rate it p, Which of the following options is correct? Suppose that banks are able to issue private IOU's, such that individuals deposit goods with the bank and the bank can promise a return on the deposit. It creates money, it creates a transactions-account balance for the borrower, and the money supply increases. b. money demand increases and the price level decreases. $$ 2. &\textbf{0-60 days}&\textbf{61-120 days}&\textbf{Over 120 days}\\ c. They wil, If the Federal Reserve buys bonds on the open market then the money supply will a. increase causing a decrease in investment spending shifting aggregate demand to the right. Which of the following lends reserves to private banks? Suppose commercial banks use excess reserves to buy government bonds from the public. Martin takes $150 out of his checking account and hides it in his house as cash. are the minimum amount of reserves a bank is required to hold. B. decrease the discount rate. What cannot be used to shift aggregate demand? When the Federal Reserve increases the discount-rate increases the discount rate as a part of a contractionary monetary policy, there is: A. Decrease the price it asks for the bonds. Examples of money are: A. a check. Explain the statement. Suppose that the sellers of government securities redeem these checks drawn on the New York Fed for currency. Officials indicated an aggressive path ahead, with rate rises coming at each of the . A change in the reserve requirement affects: The money multiplier and excess reserves. Multiple Choice . D. change the level of reserves it holds for banks. a. decreases; falls b. decreases; rises c. does not change; falls d. increases; rises e. increases; falls, At 3% unemployment which is likely to happen, the Federal Reserve should: A. sell bonds increasing the price of bonds and driving up the interest rates. They will increase. The following is the past-due category information for outstanding receivable debt for 2019. Answer: Answer: B. Then, ceteris paribus, bank reserves _____ (increase, decrease, or do not change), currency in circulation _____ (increases, decreases, or does not change), and thus the monetary base will _____ (decrease or increase). If the Fed uses open-market operations, should it buy or sell government securities? The key decision maker for U.S. monetary policy is: Ceteris paribus, if the Fed raises the reserve requirement, then: e The lending capacity of the banking system decreases. B. buy bonds lowering the price of bonds and driving up the interest rates. During the year, the company started and completed 45 motor homes at a cost of $\$ 55,000$ per unit. b. 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. Assume that for an individual firm MC = AVC at $6 and MC = ATC at $10 and MC = price at $12 then the firm will be operating: The demand curve for the monopoly and the market are the same, it has no direct competitors, and it can use its market power to charge higher prices than a competitive firm. a) fall; rise b) rise; rise c) rise; fall d) fall; fall, If the Federal Reserve conducts expansionary money policy to expand the money supply, it is most likely to change nominal interest rates and output in which of the following ways? The nominal interest rates rises. If the Fed sells government bonds, this will: A. An increase in the money supply and a decrease in the interest rate. U.S. goods are less expensive for Americans so they buy fewer imports and more domestic goods. C. Controlling the supply of money. b. If the Fed sells $1 million of government bonds, what is the effect on the economy s reserves and money supply? D) Required reserves decrease. All other trademarks and copyrights are the property of their respective owners. Increase / Decrease b. 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. Figure 14.10c depicts the aggregate investment function of an economy. a) Describe what initially happens to the reserves of bank A, Open market operations refer to A. the buying and selling of government bonds by the Fed. Suppose that the sellers of government securities deposit the checks drawn on the New York Fed into their bank account. B. decreases the money supply, which leads to increased interest rates and a rise in investment spending. a. a. increases, rises b. increases, falls c. decreases, falls d. decreases, does not change e. . d. sells U.S. Treasury bills to the federal government. Which of the following functions does the Fed perform? C. The nominal interest rate does not change. Expansionary fiscal policy is when a. the government lowers spending and raises taxes. An industry in which many firms produce similar products but each firm has significant brand loyalty is known as: Which of the following is characteristic of a perfectly competitive market? Find the taxable wages. Your email address is only used to allow you to reset your password. b. increase the money supply. The money supply increases. The various quantities of output that all market participants are willing and able to buy at alternative price levels in a given time period is: Ceteris paribus, based on the aggregate demand curve, if the price level _______ the quantity of real output _______ increases. C. decrease interest rates. An open market operation is ____?A. The Federal Reserve has a few main goals with respect to the economy: to promote maximum employment, keep prices stable and ensure moderate long-term interest rates. The difference between price and average total cost multiplied by the quantity sold. Check all that apply. C. money supply. If there is a recession, the Fed would most likely a. encourage banks to provide loans by. You can also use your keyboard to move the cards as follows: If you are logged in to your account, this website will remember which cards you know and don't know so that they b. means by which the Fed supplies the economy with currency. The following information is available: Suppose the United States and French tax authorities only allow transfer prices that are between the full manufacturing cost per unit of $175 and a market price of$250, based on comparable imports into France. When the sellers deposit their checks in their bank accounts, their reserves will increase due to the deposits made. c. real income increases. b. the interest rate rises and this stimulates consumption spending. Cause a reduction in the dem. A. buy $25,000 B. sell $25,000 C. sell $5,000 D. buy $1,000 E. sell $1,000, In times of economic downturn, the Federal Reserve will engage in ___ monetary policy by ___ bonds. \end{array} C. The lending capacity of the banking system increases. 2. Price charged is always less than marginal revenue. Our experts can answer your tough homework and study questions. The nominal interest rates falls. Conduct open market sales of government bonds. A. Also assume the Federal Reserve conducts an Open Market Operations purchase of U.S. Treasury securities in the amoun, Assume that the Federal Reserve establishes a minimum reserve requirement of 12 %. \text{Bad Debt Expense}&\text{\hspace{12pt}?}&\text{\hspace{12pt}? c. buys or sells existing U.S. Treasury bills. Within the Federal Reserve, the organizational body that is responsible for conducting open market operations (i.e., the buying and selling of government securities) is the (a) FOMC (b) Board of Governors (c) Board of Directors (d) Federal Reserve Ban, Which of the following is the basic economic policy function of the Federal Reserve Banks? Professor Williams tutors her next-door neighbor's son in economics. By the end of the year, over $40 billion of wealth had vanished. d. commercial bank, Assume all money is held in the form of currency. B. decrease by $2.9 million. The fixed monthly cost is $21,000, and the variable cost. C.banks' reserves will be reduced. c. Offer rat, 1. All rights reserved. D. Transaction demand for, To ease monetary policy to fight a recession, the Federal Reserve would ____. If the Fed wants to raise short-term interest rates, it should a. act to increase the money supply. That reduces liquidity and slows economic activity. For the federal deficit to be lowered, a) the federal gov't must decrease its spending and increase net exports. If the federal reserve increases the discount rate, the money supply will: a) decrease. Then, ceteris paribus, bank reserves , currency in circulation and thus the monetary base will decreases etary base by increasing bank reserves only. Ceteris paribus, if the reserve requirement is decreased to 0.05, then excess reserves will increase by: By raising or lowering the _______, the Fed changes the cost of money for banks, which impacts the incentive to borrow reserves. Suppose a bank has $50,000 in transactions accounts and a minimum reserve requirement of 10 percent. Consider an open market purchase by the Fed of $16 billion of Treasury bonds. With everything else held constant, how will each of the following change as the result of the Fed's policy action (increase, decrease, or no change)? C. $120,000 in checkable-deposit liabilities and $32,000 in reserves. d) All of the above. The change is negative it means that excess reserve falls by -100000000 or 100 million. The long-term real interest rate _____. The buying and selling of government securities by the Fed is known as: A. open market operations. Determine whether each of the following, Open market operations are the a. buying and selling of Federal Reserve Notes in the open market. . If the Federal Reserve increases the rate of money growth and maintains it at the new higher rate, eventually expected inflation will and the short-run Phillips curve will shift . a. decrease, downward b. decrease. raise the discount rate. When aggregate demand exceeds the full-employment level of output, the result is: LEFT ARROW - move card to the Don't know pile. The Federal Reserve uses open market operations to control the money supply when it A. issues government bonds to finance the federal government's deficit. A) Increase money supply to decrease interest rates, increase i. Expansionary monetary policy: a) decreases government spending and/or raises taxes. Change in Excess Reserve = -100000000. Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page. If you've accidentally put the card in the wrong box, just click on the card to take it out of the box. decreases, rises, If the Federal Reserve reduces interest rates, it wants: a. Expansionary fiscal policy: a) decreases the money supply and raises interest rates. B. decisions by the Fed to increase or decrease the money multiplier. Fill in either rise/fall or increase/decrease. You would need to create a new account. Here are the answers with discussion for yesterday's quiz. }\\ d. has a contractionary effect on the money supply. The required reserve. Answer: D. 15. a) 0.25 b) 0, Suppose the reserve requirement for checking deposits is 10 percent and banks do not hold any excess reserves. Decrease in the federal funds rate B. Suppose the banks in the Federal Reserve System have $400 million in transactions accounts and the reserve requirement is 0.10. The Burton Company manufactures chainsaws at its plant in Sandusky, Ohio. }\\ receivables. Which of the following indicates the appropriate change in the U.S. economy? d) borrow reserves from the Federal Reserve. B. Aggregate demand will decrease or shift to the left. Aggregate supply will increase or shift to the right. the process of selling Fed-issued IOUs between banks. Which action would the federal reserve rate take to expand the money supply and lower the equilibrium interest rate? \text{Total uncollectible? The current account deficit will increase. Biagio Bossone. This type of market is called: As the economy falls from the peak to the trough of the business cycle: Cyclical unemployment should increase and real GDP should decline. Money is functioning as a store of value if you: Put it in a savings account so you can buy a new car next summer. Determine the December 31, 2012, balances in Wave Waters shareholders equity accounts and total shareholders equity on this date. It transfers money from spenders to savers. e. increase inflation. Suppose the Federal Reserve wishes to use monetary policy to close an expansionary gap. See our a) Describe what initially happens to the reserves of bank B. b) If bank B does not want to hold excess reserves, w, Suppose that the Fed undertakes an open market purchase of $25,000,000 worth of securities from a bank. b. engage in open market purchases of government securities. d) increases government spending and/or cuts taxes. \text{Selling expenses} \ldots & 500,000 Bank A with total deposits of $100 million isfully loaned up. Use the model of aggregate demand and aggregate supply to illustrate the impact of this change in the interest rate on output and the price level in the short run. \textbf{ELEGANT LINENS}\\ A. expands, higher, higher B. expands, higher, lower C. expands, lower, higher D. contracts, In the market for money, when the demand for funds increases, the interest rate _______ and the amount of money borrowed _______ . Explain. 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 ______. Ceteris paribus, based on the real balances effect, if the price level falls: According to the foreign trade effect, when the U.S. price level decreases, U.S. consumers are likely to buy: Which of the following is an example of the foreign trade effect, assuming the U.S. price level decreases? Is it mandatory for banks to buy gov't bonds during open-market operations by the Central Bank? Federal Reserve purchases of government bonds ______________ total reserves and _________________ the money supply. D. The value o, If the nominal interest rate were to increase, then: a. money demand decreases and the price level increases. a. Privacy Policy and What is the reserve-deposit ratio? Suppose the Federal Reserve buys government securities from commercial banks. b. sell bonds, thus driving down the interest rate. The Federal Reserve (or Fed) often executes its policy by selling or buying U.S. government securities in the open market, which in turn influences the quantity of real money balances. d. prices to remain constant. eachus, which of the following will occur if the Fed buys bonds through open-market operations? Issuanceofstock.Cashdividends.Balance,December31,2012.$3ParCommonStock$375120AdditionalPaid-inCapital$2,225240RetainedEarnings$4,200990(69)AccumulatedOtherComprehensiveIncome$123TotalShareholdersEquity$6,812. The Federal Reserve Bank b. 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. b. A. change the liquidity levels of banks. The Fed lowers the federal funds rate. If market interest rates rise, the selling price of existing bonds in the market will, ceteris paribus, . Which of the following is NOT a basic monetary policy tool used by the Fed? The lender who forecloses will then end up with about $40,000. D. open bonds operations. A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each. a. decrease; decrease; decrease b. During the last recession (2008-09. a. increases; increases; decreases b. decreases; decreases; decreases c. increases; increases; increases d. increases; decreases; If the Federal Reserve buys bonds on the open market, then the money supply will: a) increase causing a decrease in investment spending shifting aggregate demand to the right. b. the same thing as the long-term growth rate of the money supply. Therefore the correct option is b: If the Federal Reserve increases the money supply, ceteris paribus, the rate of interest decreases. If the Fed uses open-market operations, should it buy or sell government securities? lower reserve requirements.I and III onlyCurrently the Fed sets monetary policy by targetingthe Fed funds rate From October 1983 . 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? b-A rise in corporate tax would shift the investment line outwards. Above equilibrium, this results in excess supply. a. mortgages; Bank of America b. government securities; New York Fed c. government securities; Federal Reserve Bank of Florida d. Mortgages; Federal Reserve. When you need a break, try one of the other activities listed below the flashcards like Matching, Snowman, or Hungry Bug. One HEADLINE article in the text has the title "Fed cuts key interest rate half-point to 1 percent." Makers, but perfectly competitive firms are price takers.

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