d) decreases, so the money supply decreases. 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? \text{French import duty} & \text{20\\\%}\\ The Federal Reserve conducts open market operations when it wants to [{Blank}]? 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. Generally, the central bank. b. the Federal Reserve buys bonds on the open market. The Federal Reserve Bank b. d. lower reserve requirements. These actions can be classified as expansionary or contractionary, depending on the prevailing market conditions. Suppose commercial banks use excess reserves to buy government bonds from the public. b. the interest rate increases c. the Federal Reserve purchases bonds. 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. Sell government securities 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 the incentive to borrow funds increases b. C. contractionary monetary policy by, An open market sale by the Fed A. increases the money supply, which leads to increased interest rates and a fall in investment spending. C. influence the federal funds rate. Suppose the Federal Reserve buys government securities from commercial banks. b. buys or sells foreign currency. The aggregate supply curve is positively sloped because as the price level increases: Profit margins increase in the short run. 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. D. change the level of reserves it holds for banks. &\textbf{past due}&\textbf{past due}&\textbf{past due}\\[5pt] b. a) Given the required reserve ratio, RR/D=0.10, the excess reserves to deposits ratio, ER/D=0.06, the currency to deposits ratio, Assume that any money lent by a bank is always deposited back in the banking system as a checkable deposit and that the required reserve ratio is 15%. a. a. When the Fed decreases the discount rate, banks will a) borrow more from the Fed and lend more to the public. $$ \text{Full manufacturing cost per chainsaw} & \text{\$175}\\ Fill in either rise/fall or increase/decrease. Name the three tools of monetary policy that the Federal Reserve System can do to combat inflation. d) setting interest r, Suppose the Federal Reserve sells $30 million worth of securities to a bank. Ceteris paribus, if the Fed reduces the reserve requirement, then: A. If the price of computers falls during a period when the average price level remains constant, which of the following has occurred? b. decrease the money supply and decrease aggregate demand. C) Total deposits decrease. 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. When the Federal Reserve increases the discount-rate increases the discount rate as a part of a contractionary monetary policy, there is: A. Enter the effect of this open-market operation on Bank A's T-account, assuming that the proceeds from the p. If the Federal Reserve wants to decrease the money supply, it should: A. conduct open market purchases. Now suppose the Fed lowers. Match the terms with definitions. &\textbf{0-60 days}&\textbf{61-120 days}&\textbf{Over 120 days}\\ C. decreases, 1. D. Transaction demand for, To ease monetary policy to fight a recession, the Federal Reserve would ____. Multiple . Remember that the transfer price must be between the full manufacturing cost per unit of $175 and the market price of$250 of comparable imports into France. a) 0.25 b) 0, Suppose the reserve requirement for checking deposits is 10 percent and banks do not hold any excess reserves. B. excess reserves at commercial banks will decrease. If $200,000 is deposited in the bank, then ceteris paribus: Excess reserves will increase by $170,000. a. Your email address is only used to allow you to reset your password. b) increases, so the money supply decreases. c) not change. The Federal Reserve calculates and provides reserve balance requirements before the start of each maintenance period to depository institutions via the Reserves Central--Reserve Account Administration, which is available on the Federal Reserve Bank Services website. b) Lowering the nominal interest rate. If the Fed raises the reserve requirement, the money supply _____. Learn more about the Federal Reserve's control methods and examine contractionary and expansionary monetary policies. B. influence the discount rate. Ceteris paribus, if the Fed raises the reserve requirement, then: The lending capacity of the banking system decreases. The fixed monthly cost is $21,000, and the variable cost. It creates money, it creates a transactions-account balance for the borrower, and the money supply increases. An increase in the money supply and a decrease in the interest rate. In the short run, the quantity of money demanded [{Blank}] and the nominal interest rate [{Blank}]. How would this affect the money supply? \end{matrix} d. an increase in the supply of bonds and a fal, When there is an excess supply of money: A. the Fed will decrease the money supply. Fill in either rise/fall or increase/decrease. Suppose the Federal Reserve buys government securities from the nonbank public. Raise reserve requirements 3. a)increases; increases b)increases; decreases c)decreases; increase, 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). 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. It involves the direct exchange of one good or service for another. Name the three tools of monetary policy that the Federal Reserve System can do to combat unemployment/recession. The sale of bonds to the Fed by banks B. It sells $20 billion in U.S. securities. Interest rates typically rise in a recession because the demand for money increases when real income falls. b. buys bonds from banks, which increases bank reserves. b. the money supply is likely to decrease. c) decreases government spending and/or raises taxes. 1. Expansionary fiscal policy: a) decreases the money supply and raises interest rates. 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 Above equilibrium, this results in excess supply. Money supply to decrease b. Makers, but perfectly competitive firms are price takers. c-A forecast of a permanent demand increase shifts the investment line . Check all that apply. \end{array} 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? A) Increase money supply to decrease interest rates, increase i. Expansionary monetary policy: a) decreases government spending and/or raises taxes. 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. a. e. increase inflation. 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. C. increase the supply of bonds, If the money supply increases, what happens in the money market (assuming money demand is downward sloping)? Federal Reserve purchases of government bonds ______________ total reserves and _________________ the money supply. }\\ c) decreases, so the money supply increases. During the last recession (2008-09. B. there is an excess demand for bonds, so those looking to borrow by selling bonds can do so at a lower interest rate. What are some basic monetary policy tools used by the Fed? Suppose the Federal Reserve buys government Open market operations versus discount loans Consider an expansionary open market operation. 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. d. raise the treasury bill rate. B. fewer reserves and inc, Suppose you read in the paper that the Fed plans to reduce money supply. Suppose government spending increases. When the Federal Reserve Bank buys US Treasury bonds on the open market, then _______. Inflation rate _____. Suppose a market is dominated by three firms. Which transfer prices should the Burton Company select to minimize the total of company import duties and income taxes? b) running the check-clearing process. All rights reserved. Our experts can answer your tough homework and study questions. Some terms may not be used. Changing the reserve requirement is expensive for banks. All other trademarks and copyrights are the property of their respective owners. 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? are the minimum amount of reserves a bank is required to hold. b. If the Federal Reserve System buys government securities from commercial banks and the public: a. the money supply will contract. \begin{array}{lcc} \text{Total per category}&\text{?}&\text{?}&\text{? &\textbf{Original Categories}&\textbf{Categories Change}\\[5pt] \text{Direct materials used} \ldots & \$ 750,000\\ An increase in the reserve ratio: a. increases the money multiplier. Which of the following functions does the Fed perform? III. When you've placed seven or more cards in the Don't know box, click "retry" to try those cards again.
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