During financial crisis, BSP buys bonds in the commercial banks to increase money supply. True False When the rediscount rate rises, this gives more opportunity for the commercial banks or universal banks to borrow money from the BSP. True False
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- 29. During financial crisis, BSP buys bonds in the commercial banks to increase money supply. TRUE OR FALSE13. When the government uses its overdraft facilities at the central bank, it ___________ the quantity of moneyin the economy. This is called ___________________ financing. A Increases; deflationaryB Decreases; inflationaryC Decreases; deflationaryD Increases; inflationaryWhat is the sequence of events from a rise in the federal funds rate target range to a change in the inflation rate? Other short-term interest rates _______. A. and the long-term interest rate rise the same day B. rise the same day, but it takes a few months for the supply of loanable funds to decrease C. rise within a few weeks, but the long-run interest rate rises almost immediately D. rise the same day, but it takes a few months for the supply of loanable funds to increase
- Which of the following best describes the main responsibility of a central bank? *A. it acts as an intermediary in the financial marketB. it ensures an efficient and safe financial marketC. it facilitate the flow of funds in the financial marketD. all of the aboveE. none of the aboveThe bank credit expansion that initiates the inflationary boom is caused by A. Irrational over-optimism on the part of entrepreneurs and business B. Banks reducing their credit standards and lending more funds C. The Fed's injection of new reserves into the banking systemIn the late 1970s and early 1980s, as the Federal Reserve squeezed the growth of the money supply, interest rates shot up and a. profits began to increase dramatically. b. the unemployment rate shot up as well. c. the unemployment rate plummeted. d. the economy began to recover The Panic of 1907 was triggered by a. excessively loose lending by banks and trusts, a need to divert cash to San Francisco following the 1906 earthquake, and excessively restrictive regulation of financial markets. b. a need to divert cash to San Francisco following the 1906 earthquake, government intervention that broke up many of the major trusts, and a lack of effective oversight of financial markets. c. excessive speculation in the stock market, excessively tight lending by banks and trusts, and excessively restrictive regulation of financial markets. d. excessive speculation in the stock market, excessively loose lending by…
- 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 the economy e. the willingness of household and firms to take up new debts at the given interest rateDuring recessions, most banks will experience the following: A Their net worth will increase because customers pay off their loans. B Their net worth will decrease because customers will not repay a higher share of loans. C Their net worth will increase because customers will pay a higher share of loans. D A and CAside from money supply, the Central Bank can also cause ________. a. increases in the employment b. increases in the government’s budget c. increases in the interest rate d. increases in aggregate output
- assume that the economy is operating in a recessionary. explain all the steps which the bank of canada should take in order to fix this problem. 2 graph is needed along with the explanation.In economics, what does the term liquidity refer to? A. The ease with which an asset can be converted into cash without loss of value B. The level of profitability of a firm C. The degree of government intervention in the market D. The price of goods and services in an economyWhat does the term exogenous money supply mean? a. The money supply is determined by external factors b. The money supply is controlled by households c. The money supply is determined by the central bank d. The money supply is determined by market forces.