Answered: What is the newest money supply tool…

What is the newest money supply tool available to the Fed? open market operations O the reserve requirement ratio the discount rate

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter13: The Federal Reserve System

Section13.3: Other Fed Tools And Recent Fed Actions

Problem 1ST

See similar textbooks

Related questions

Q: Demand theory is an economic principle relating to the relationship between consumer demand for…

A: Answer: Introduction: Leisure or tourism sector: tourism refers to traveling and visiting other…

Q: Question 1 of 20 A short-term savings strategy is most useful for people who want to: O A. withdraw…

A: There are different type sof investments in which an individual can invest his money to earn extra…

Q: 9. Below is the total benefit Kenneth estimates he would get for jars of chocolate-flavored hazelnut…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: Using the Lucas Island model show that random shocks to the money supply will impact output while…

A: Lucas Island Model given by Robert Lucas. It is an economic model which shows the relationship…

Q: nits equal e to one hira of total emissior economy (so two-thirds of all emissions m bated), and…

A: *Answer:

Q: Possible solution in a post normal perspective about regaining the economy of a third world country.

A: Third world economy Third world economy stands for the countries which are less developed. These…

Q: Company Alpha produces its product in a perfectly competitive market that is in long-run…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: competitive firm faces the following market price: P=200. Variable costs are C(Q)=Q^2. The firm also…

A: In competitive market there are large number of firms producing identical goods

Q: The figure below shows a firm's long-run average cost curve (LAC) in light 2. blue. Three of the…

A: A long run average cost curve is known as an arranging bend. This is on the grounds that a firm…

Q: Question 3 (CL03): Answer the following questions based on figure given below? 100 200 300 400 500…

A: Since you have provided multiple subparts questions, we will solve the first three for you. If you…

Q: Suppose that in a Borda count election, outcome X is preferred to outcome Y, and outcome Y is…

A: Borda Count is a voting method in which the winner is decided based on the preferences of the voters…

Q: 1. A piece of construction equipment was bought 3 years ago for $ 500,000, expected li: of 8 years…

A: PW stands for present worth. EAC stands for equivalent annual cost, it can be calculated by dividing…

Q: 1. It shows the peak of a business cycle. A. Recession B. Recovery C. Prosperity D. Depression…

A: Business cycle is a cycle which tells about the change in demand of a product. It is of four types -…

Q: 2. Do measures of GDP (real GDP, real GDP per capita or nominal GDP) provide enough information to…

A: The economic resources available to sustain their material living situations, as well as their…

Q: B. Use the data in the table below to calculate the opportunity cost of moving from production point…

A: Opportunity cost refers to loss that occurs due to giving up the next best alternative while making…

Q: All Over Shampoo is launching a new anti-dandruff, 2-in-1 conditioning product in a simulated test…

A: Hi! Thank you for the question As per the honor code, We’ll answer the first question since the…

Q: 1. What is the purpose of segmenting the market? Please explain your answer.

A: Disclaimer: “Since you have asked multiple questions, we will solve the first question for you. If…

Q: Look at the following ratios: • 90/10 ratio the ratio of Decile 10 income to Decile 1 income • 90/50…

A: The decile dispersion ratio compares the average earnings/income of the x percent (wealthy…

Q: Pennybags is the only seller of board gam Atlant ity, New Jersey. The inverse demand curve for board…

A: The perfect price discrimination leads to the competitive output And consumer surplus is zero.

Q: Consider the following two-player game. S; = [0, 1], for i = 1, 2. Payoffs are as follows S 100 if…

A: There are two players - 1 & 2 Utility function : u1 (s1, s2 ) = 100 , if s1 = s2 else 0 u2…

Q: Food has successfully paved its way as the favourite luxury in every family, emerging as an ample…

A: CAGR, is the mean annual growth pace of an investment throughout a predetermined timeframe longer…

Q: For each scenario listed below, start by drawing a fully-labeled Aggregate Supply-Aggregate Demand…

A: Answer a. When the federal government spends more on national defence, the aggregate-demand curve…

Q: 25. Suppose an economy exhibits a large unexpected decrease in productivity growth that lasts for a…

A: Efficiency development or productivity growth alludes to an expansion in the worth of results…

Q: QUESTION 25 The Marginal Cost curve crosses the Average Total Cost curve at its maximum. True False

A: "Marginal cost represents change in total costs when one more unit is produced while average total…

Q: A. Consider a firm who sells output at p=10 and has a short run production function Q(L)=20L-L². Its…

A: MPL = dQ/dL VMPL= P*MPL Wage = 40 and p=10

Q: Company Alpha produces its product in a perfectly competitive market that is in long-run…

A: In a perfectly competitive market there are large number of firms producing similar and identical…

Q: Given the example of Toyota as a car manufacturer, explain to the management team how the company…

A: The process of determining a value for a commodity or service is known as pricing in economics and…

Q: ompute the number of periods in order that the capital recovery factor for a uniform payment series…

A: A/P = 0.1424564 r = 6% compounded semianually

Q: Suppose if the inflation rate of a country increases sharply. What happens to the inflation tax on…

A: Inflation rate in any Economy is what explains the general rise in price level and thus alters the…

Q: Name and discuss the factors that shift the IS Curve. Give two examples, with the help of a diagram,…

A: The term "IS curve" refers to the graph that illustrates the various permutations of the level of…

Q: Assume that a consumer's utility over two years is a function of consumption during the twe years.…

A: Utility function : U = ln C1 + B ln C2 Intertemporal Budget Constraint : C1 + C2/(1+R ) = Y1 +…

Q: Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His…

A: Total cost is the sum of Fixed cost and variable cost. Fixed cost remains same at all levels of…

Q: 18. Troy's Tire Mart has a replacement value of $965, 000 and is insured for $588, 000, with an 80%…

A: Post-normal can be a way to restoring a third-world country's economy. A loss is defined as an…

Q: 18. Troy's Tire Mart has a replacement value of $965, 000 and is insured for $588, 000, with an 80%…

A: A loss is defined as an increase in costs above revenues, either for a single business transaction…

Q: QUESTION 15 Consider a firm operating in a competitive market. The firm is producing 50 units of…

A: Q15) "Economic profits are computed by deducting total cost from total revenue."

Q: c) Suppose a crisis in consumer confidence decreases autonomous consumption to $100. Show…

A: Full employment level is achieved where LRAS=AD = SRAS . beyond the level of Full employment output…

Q: Q1. The experience of Greece illustrates some of the challenges of the eurozone. As a result of the…

A: Recession A recession in an economy is considered a situation in which the overall economy of a…

Q: A firm has fixed costs of $100 at 10 units. If its variable costs at 15 units are $100, what must…

A: Total cost is the sum of Fixed cost and variable cost. Fixed cost remains same irrespective of…

Q: Answer the following to determine your knowledge of elasticity: (1) Suppose you are the chief…

A: Price elasticity of demand refers to the percentage change in quantity demanded due to percentage…

Q: What are marketing, operations, finance, and human resource of Alibaba Group: The Rise of a Platform…

A: Alibaba, which began as a tool to assist small Chinese businesses with export transactions in 1999,…

Q: If the IRR of Alternative A is 10%, the IRR of Alternative B is 8% and the MARR is 6%, which of the…

Q: The marginal cost of supplying another unit of output of an electronic product on the internet is…

A: Marginal cost is the cost incurred on one additional unit produced as output

Q: Which statement about the economic crisis of the 1970s is INCORRECT? A. American manufacturing was…

A: The economic crisis of the 1970s The year featured some of the greatest inflation rates in recent…

Q: 3. The following is an interpretation of the rivalry between the United States (USA) and the Soviet…

A: Given pay off matrix of game

Q: What is GDP deflator? What for do we use GDP deflator?

A: Gross domestic product refers to the total value of all final goods and services generated in an…

Q: 1. Due to the creation of the multiverse, two parallel universes, Universe 30.13 and Universe 30.14,…

A: Gini index is the area between the uniform equality line and the Lorrenz curve . Area under…

Q: Suppose that a small-town theater has six potential customers and is looking to implement price…

A: A potential customer is an individual who has requirements and desires which can be fulfilled by…

Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

1 What is the newest money supply tool available to the Fed?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Humongous Bank is the only bank in the economy. The people in this economy have 20 million in money, and they deposit all their money in Humongous Bank. Humongous Bank decides on a policy of holding 100 reserves. Draw a T-account for the bank. Humongous Bank is required to hold 5 of its existing 20 million as reserves, and to loan out the rest. Draw a T-account for the bank after it has made its first round of loans. Assume that Humongous bank is part of a multibank system. How much will money supply increase with that original 19 million loan?
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 32Deposits 205Loans 150 Securities 53Other $X Using the balance sheet above, find the level of required reserves for this bank if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)
What "backs" the money supply of the United States? Multiple Choice O the fact that currency is issued by the Federal Reserve System O the amount of gold the U.S. government has on deposit at its banks O the fact that the intrinsic value of coins in circulation is greater than their face value the U.S. government's ability to keep the value of money relatively stable
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)
macmillan learning Suppose that the legal reserve ratio set by the Fed is 10% and that the Fair Bank in Fairdealing, Missouri, initially has checkable deposit equal to $240 and a reserve account of $70. A customer of Fair Bank deposits $100 into her checking account. Fair Bank loans 80% of the deposit and places the rest in its reserves at the St. Louis Fed. For simplicity, assume the borrower received the loan as cash. How much does Fair Bank have in excess reserves after the deposit and loan? Number Place the figures below to represent changes in the accounts of Fair Bank and the Federal Reserve of St. Louis' balance sheets resulting from the deposit and loan. Hint Cash: Reserves: Loans: Property: $ +$100 +$80 Balance Sheet: Fair Bank Liabilities: Net equity: +$20 -$100 -$20 +$10 -$80 -$10 Balance Sheet: Saint Louis Fed Liabilities: Cash: Property: Loans: Previous Check Answer Next Exit
ou just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all excess reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar. If the reserve requirement is 1212%, how much will your deposit increase the total value of checkable bank deposits? $ If the reserve requirement is 44%, how much will your deposit increase the total value of checkable deposits? $ Increasing the reserve requirement the money supply.
The table shows the commercial banks' balance sheet (aggregated over all the banks). The commercial banks' desired reserve ratio on all deposits is 5 percent and there is no currency drain. Question Help Calculate the bank's excess reserves. Assets >>> Answer to 2 decimal places. Liabilities (millions of dollars) Reserves at the Fed 20 The banks' excess reserves are $ Checkable deposits 120 million. Cash in vault 15, Savings deposits Securities 90 65 Loans 110 Enter your answer in the answer box and then click Check Answer. ? 2 parts remaining Clear All Check Answer MacBook Air DII DD F12 888 F11 F10 F7 F8 F9 F5 F6 F4 esc F2 F3 F1 & # $ % delete %3D ! @ 6. 8. 4 1 2 Y Q W E tab J K F G A S caps lock N M V shift option command I T
Why can’t the Fed control the money supplyperfectly?
XYZ bank has $500 of reserves, $500 of loans and $1000 of deposits. Let's suppose that the required reserve ratio is 10%. How much could the bank make in additional loans right now? How much will be the excess reserves? How much could the bank make in additional loans right now? How much will the money supply increase after the money creation process is finished?
You take $100 you had kept under your mattressand deposit it in your bank account. If this $100stays in the banking system as reserves and if bankshold reserves equal to 10 percent of deposits, byhow much does the total amount of deposits in thebanking system increase? By how much does themoney supply increase?
When the Fed began paying banks interest on their reserve deposits with the Fed in 2008, this provided it with a tool that could be used to: O control the M2 money supply, but not the M1 money supply. O determine if interest rates should be increased or decreased. O determine whether the money supply should be increased or decreased. O control the reserves of banks, and act as a substitute for mandated reserve requirements,
The table gives information about items on a bank's balance sheet. Calculate the bank's deposits that are part of M1, deposits that are part of M2, and the bank's loans, securities, and Item reserves. (millions of dollars) Checkable deposits Savings deposits Small time deposits 400 The bank's deposits that are part of M1 equal $ million. 500 720 The bank's deposits that are part of M2 equal $ million. Loans to businesses 950 Government securities 600 Currency 30 Reserves at the Fed 40 Enter your answer in the edit fields and then click Check Answer. 2 parts remaining Clear All Check Answer MacBook Air DII DD 80 888 F10 F11 F12 esc F4 F5 F6 F7 F8 F9 F1 F2 F3 ! @ 23 $ % & 1 2 4 6 7 { Y U P Q W E tab S D F G H K А caps lock > + I/ * 00