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

Ceteris paribus, an increase in _______ will cause an increase in ______. 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. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases, If the Federal Reserve was concerned about the "crowding-out" effect, they could engage in: A. expansionary monetary policy by lowering the discount rate. Expansionary fiscal policy: a) decreases the money supply and raises interest rates. d. the price level decreases. Assume that the currency-deposit ratio is 0.5. \textbf{Year Ended December 31, 2019}\\ Expansionary fiscal policy is when a. the government lowers spending and raises taxes. In the short run, the quantity of money demanded [{Blank}] and the nominal interest rate [{Blank}]. c). Holding the deposits or reserves of commercial banks. To see how well you know the information, try the Quiz or Test activity. a) increases; decreases, b) decreases; increases, c) decreases; decreases, d) increases; increases. Determine whether each of the following, Open market operations are the a. buying and selling of Federal Reserve Notes in the open market. D. All of the above. The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is referred to as: Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term so that they: Make their decisions based on economic, rather than political, considerations. The number of deposit dollars the banking system can create from $1 of excess reserves. Suppose the Federal Reserve engages in open-market operations. d. lend more reserves to commercial banks. $$ The long-term real interest rate _____. \end{array} C. The lending capacity of the banking system increases. C. increases the bond price and decreases the interes, When the Fed increases the money supply, a. people spend less because they have more money. d) All of the above. b. it will be easier to obtain loans at commercial banks. 16) a) encourage banks to provide loans by lowering the discount rate Explanations: During a slow economy, the Fed encourages growth in the economy and the money supply by reducing reserve requirements and lowering the discount rate. Decrease the discount rate. Working Paper No. Conduct open market sales of government bonds. - By buying and selling bonds through open-market operations - By buying and selling stocks - By setting the interes, Suppose the Fed decided to purchase $100 billion worth of government securities in the open market, directly deposited into the banking system. A combination of flexible rules and limited discretion. \text{Total Expenses}&\text{\hspace{12pt}?}&\text{\hspace{12pt}? Each bond is worth $1000 (so the Fed has bought $3000 worth of bonds). Patricia's nominal annual income in 2009 was $60,000. 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? Some terms may not be used. Annual gross pay of $18,200. 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 ) bond yields will fall 2) A negative output gap indicates that A) nominal GDP is below real GDP. b. an increase in the demand for money balances. Instead of paying her for this service,the neighbor washes the professor's car. }\\ Causes an increase in the federal funds rate, c. Increases reserve holdings of the commercial banks, d. Lowers the cost of borrowing from the Fed, e. Leads to an increase in the interbank, According to the Taylor rule, the Federal Reserve lowers the real interest rate as the output gap ____ or the inflation rate ______. b. This causes excess reserves to, the money supply to, and the money multiplier to. 2. The nominal interest rates falls. d. equilibrium interest rate rises e. demand for money curve shifts leftward, If the Federal Reserve increases the rate of money growth and maintains it at the new higher rate, eventually expected inflation will [{Blank}] and the short-run Phillips curve will shift [{Blank}]. Consider an expansionary open market operation. If the Fed decreases the money supply, GDP ________. The result is that people a. increase the supply of bonds, thus driving up the interest rate. A stock person who is laid off by a department store because retail sales across the country have decreased is _______ unemployed. a. decrease; decrease; decrease b. That reduces liquidity and slows economic activity. A decrease in the reserve ratio will: a. D) Required reserves decrease. C. decisions by the Fed to raise or lower interest rates. The money supply increases. Suppose the Federal Reserve buys government securities from commercial banks. d. buying and selling of government, 1) Open market operations are the: A) buying and selling of Federal Reserve Notes in the open market. b. the money supply is likely to decrease. Savings accounts and certificates of deposit are called. C. money supply. lower reserve requirements.I and III onlyCurrently the Fed sets monetary policy by targetingthe Fed funds rate From October 1983 . It is considered to be less efficient for an economy than the use of money. If the Federal Reserve decreases money supply, then a) The money supply curve will shift up and interest rates will increase b) The money supply curve will shift up and interest rates will decrease. c) not change. The aggregate demand curve should shift rightward. Decrease the price it asks for the bonds. b. the interest rate increases c. the Federal Reserve purchases bonds. C) buying and selling of government s. In carrying out open market operations, the Federal Reserve usually buys and sells U.S. Treasury securities. c. reduce the reserve requirement. (ii) instructs the New York Fed to sell government securities in the foreign exchange market. Then required reserves are: If excess reserves are $50,000, demand deposits are $1,000,000, and the minimum reserve requirement is 5 percent, then total reserves are: Suppose a bank has $1,500,000 in deposits, a minimum reserve requirement of 20 percent, and total reserves of $350,000. Lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public. All rights reserved. }\\ \begin{array}{l r} On March 5 and 6, I surveyed over 500 consumers about their concerns about COVID-19, awareness of the Fed's . What is the reserve-deposit ratio? If the Federal Reserve increases the money supply, ceteris paribus, the: a. rate of interest is unaffected. A) Increase money supply to decrease interest rates, increase i. Expansionary monetary policy: a) decreases government spending and/or raises taxes. A. 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. Check all that apply. a. increase the supply of money by buying bonds b. increase the supply of money by selling bonds c. increase the demand for money by buying bonds d. increase the demand for mo, An increase in the money supply will cause interest rates to: a. rise b. fall c. remain unchanged. Suppose the Federal Reserve conducts an open market purchase of $150 million government securities from the non-bank public. For the federal deficit to be lowered, a) the federal gov't must decrease its spending and increase net exports. 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 _______ . The nominal interest rates rises. Answer: Answer: B. 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. Increase / Increase c. Decrease / Decrease d. Decrease / Increase e. Decrease / No change, When the Fed implements a contractionary monetary policy this means that: (a) the price of T-Bills rises (b) the interest rate paid on T-Bills falls (c) the Federal Funds Rate increases (d) none o, 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 ______. Raise the reserve requirement, raise the discount rate or sell bonds Ceteris paribus, if the Fed reduces the discount rate, then: The incentive to borrow funds increases The use of money and credit controls to change macroeconomic activity is known as: Monetary policy C. increase by $290 million. d. the money supply and the pric, When the Fed increases the quantity of money, the: a. equilibrium interest rate falls b. demand for money curve shifts right c. supply of money curve shifts leftward. What is the impact of the purchase on the bank from which the Fed bought the securities? b. foreign countries only. d. rate of interest increases.. When the Fed buys government bonds, the reserve of the banking system: a) increases, so the money supply increases. Our experts can answer your tough homework and study questions. U.S.incometaxrateontheU.S.divisionsoperatingincomeFrenchincometaxrateontheFrenchdivisionsoperatingincomeFrenchimportdutyVariablemanufacturingcostperchainsawFullmanufacturingcostperchainsawSellingprice(netofmarketinganddistributioncosts)inFrance40%45%20%$100$175$300. Issuanceofstock.Cashdividends.Balance,December31,2012.$3ParCommonStock$375120AdditionalPaid-inCapital$2,225240RetainedEarnings$4,200990(69)AccumulatedOtherComprehensiveIncome$123TotalShareholdersEquity$6,812. b. then the Fed. 1015. When the Federal Reserve increases the discount-rate increases the discount rate as a part of a contractionary monetary policy, there is: A. (a) increases because the resulting increase in the interest rate leads to a decrease in investment (b) increases because the resulting decrease in the interest rate leads to an increase in investment (, The Fed decreases the quantity of money. During the year, the company started and completed 45 motor homes at a cost of $\$ 55,000$ per unit. Then click the card to flip it. the process of selling Fed-issued IOUs between banks. B. purchases government bonds to decrease the money supply. Perform open market purchases of securities. Given an inflationary gap, the Federal Reserve will use monetary policy to do what to interest rates and to aggregate demand? The reserve ratio is 20%. The deposit-creation potential of the banking system is: Suppose the entire banking system has $10,000 in excess reserves and a required reserve ratio of 20 percent. What cannot be used to shift aggregate demand? Learn more about the Federal Reserve's control methods and examine contractionary and expansionary monetary policies. \text{Accounts receivable amount}&\text{\$\hspace{1pt}232,000}&\text{\$\hspace{1pt}129,000}&\text{\$\hspace{1pt}100,400}\\ Ceteris paribus, if the Fed raises the reserve requirement, then: The lending capacity of the banking system decreases. D.bond prices will rise, and interest rates will fall. D. The money multiplier decreases. b. the price level increases. b. the interest rate rises and this stimulates consumption spending. Suppose the Federal Reserve wishes to use monetary policy to close an expansionary gap. 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. \text{French import duty} & \text{20\\\%}\\ A. decrease, downward B. decrease, upward C. increase, downward D. increase, If inflation begins to rise rapidly, which step is the Federal Reserve likely to take? The equilibrium price level and equilibrium output should both increase. b) borrow reserves from the public. The following is the past-due category information for outstanding receivable debt for 2019. Required reserves decrease. The Board of Governors has___ members, and they are appointed for ___year terms. 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? c. Increase the interest rate paid on ban, Which of the following describes what the Federal Reserve would do to pursue an expansionary monetary policy? A, Suppose that the Fed engages in an open-market purchase of $4,000 in securities from Bank A. The Fed's decision amounted to a shift to a more cautious period of inflation fighting. 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. What effect will this open market operation have on demand deposits and M1? 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. Free . e. increase inflation. If price is greater than marginal cost, a competitive firm should increase output because additional units of output will: Add to the firm's profits (or reduce losses). The money supply decreases. Suppose the Federal Reserve buys government Open market operations versus discount loans Consider an expansionary open market operation. c. \text{Total per category}&\text{?}&\text{?}&\text{? What fiscal policy tools are used to shift the aggregate demand curve? D. decrease, Assume that the Federal Reserve establishes a minimum reserve requirement of 12.5%. If market interest rates rise, the selling price of existing bonds in the market will, ceteris paribus, . 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 ______. The Federal Reserve conducts open market operations when it wants to [{Blank}]? 1. When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again. Our experts can answer your tough homework and study questions. b. increase the supply of bonds, thus driving down the interest rate. Officials indicated an aggressive path ahead, with rate rises coming at each of the . What types of accounts are listed on the post-closing trial balance? Explain the statement. III. If the Fed purchases $10 million in government securities, then wh. Ceteris paribus, if the Fed reduces the reserve requirement ratio, then: A) The lending capacity of the banking system increases. \text{French income tax rate on the French division's operating income} & \text{45\\\%}\\ B) The lending capacity of the banking system decreases. Would the effect on aggregate demand be larger if the Federal Reserve held the money supply constant in response or if the Fed were committed to maintaining a fixed interest rate? How will the lending capacity of the banking system be affected if the reserve requirement is 5 percent? The discount rate is the interest rate charged by, the Federal Reserve when it lends money to private banks, Ceteris paribus, if the Fed raises the reserve requirement, then, the lending capacity of the banking system decreases, If the economy is inflationary, the Fed would most likely, encourage banks to provide loans by buying government securities, if the economy is recessionary, the Fed would most likely, encourage banks to provide loans by selling government securities, Alexander Holmes, Barbara Illowsky, Susan Dean, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, David R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams, Elegant Linens uses the balance sheet aging method to account for uncollectible debt on b. If the Fed sells $5 million worth of government securities to the public, what will be the change in the money supply? Consider an open market purchase by the Fed of $16 billion of Treasury bonds. As a result, the money supply will: a. increase by $1 billion. Suppose further that the required reserve, Explain briefly: a. C. decrease interest rates. a. higher, higher b. higher, lower c. lower, higher d. lower, lower, When lots of people put their money into bonds, the demand for money and the interest rate on bonds. D. change the level of reserves it holds for banks. If the Fed sells $29 million worth of government securities in an open market operation, then the money supply can: A. increase by $2.9 million. Consider an expansionary open market operation. Excess reserves increase. The Burton Company manufactures chainsaws at its plant in Sandusky, Ohio. Suppose the Federal Reserve undertakes an open market purchase of government bonds. All rights reserved.