5- What is the money multiplier when the required reserve ratio is a. 2 percent? b. 4 percent? c. 6 percent? d. 8 percent? e. 10 percent?

7. Suppose the Federal Reserve wants to stimulate the economy, thereby increasing GDP. Which of the following policy change should be implemented?       Raising the reserve requirement ratio       Sell bonds through open market operations       Lower the discount rate       Only a & c are correct

17. Assume that the required reserve ratio is 25%. If the Fed buys $5 million worth of      government bonds from the public, the maximum change in the money supply is:   a) -$20 million. (b) -$12.5 million.   (c) $12.5 million.  (d) $20 million.

8. The reserve requirement, open market operations, and the money supply Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $400. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) (Dollars) 20           10             A higher reserve requirement is associated with a    money supply.   Suppose the Federal Reserve wants to increase the money supply by $200. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%,…

23. Identify the four major methods the Fed uses to control the money supply. Give two examples of situations in which the Fed might use one of these methods and explain why that method is best for the given situation.

5. If reserves are scarce, how would the federal funds rate change (increase or decrease) if the Fed: 1) sells mortgage-backed securities 2) decreases the (minimum) reserve requirements 3) conducts overnight repo operations 4) conducts overnight reverse repo operations

If the required reserve ratio were 10%, how much of this bank's reserves would qualify as excess reserves? A) 200,000 B) 300,000 C) 400,000 D) 550,000 E) 3,000,000

5. Consider the T-table of the Bank of Boston. Suppose the Federal Reserve Bank buys an additional $2 million in government bonds from the Bank of Boston. Assume (1) the required reserve ratio is 10 percent, and (2) the Bank of Boston issues all excess reserves in loans (I.e., there are no excess reserves). The new money supply equals $ million. Submit Balance sheet of the Bank of Boston Liabilities -55,000,000 Checkable deposits +$5,000,000 Assets Government bonds Currency (= bank reserves) +$5,000,000 Loans $0

9. Which of the following is not an administered rate?   a. Discount rate   b. ON RRP offering rate   c. Federal funds rate   d. Interest on reserve balances rate

Table 13.1: FIRST COMMERCIAL BANK Asset Liabilities S150,000 S100,000 Total Reserves: $1,000,000 $200,000 Deposits Net Worth Required Reserves ? Excess Reserves ? Loans $1,200,000 Total $1,200,000 Total 15. Refer to Table 13. 1. First Commercial bank's excess reserves equal $ a) 150,000 b) 250,000 c) 100,000 d) 50,000