All else being equal, if a central bank sells government bonds from the market it would: a. decrease the money supply. b. decrease interest rates. c. mean the supply of loanable funds would move to the right. d. most likely decrease savings in the economy

Q: 4) All else the same, if a bank's liabilities are more sensitive to interest rate fluctuations than…

A: Sensitivity to interest rate fluctuations comes under the phenomenon of Interest rate Gap, this…

Q: Why lenders assume no risk in granting loan to the government though the return of this type of loan…

A: Loans are raised by governments to meet the financing requirements of the country.

Q: Which of the following is generally the least expensive source of funding? A) demand deposits B)…

A: Demand deposits refer to funds held in bank accounts that can be withdrawn by the account holder at…

Q: Which of the following actions cannot be used by banks to increase reserves? A. Sell Treasury…

A: Reserves  are parts of the income of a corporation that have been set aside to improve the financial…

Q: rates rise, bor

A: The correct option is shown as,

Q: 3. Answer the following questions based on the information below Proposed credit policy (net 30)…

A: Hey, since there are multiple subpart questions posted, we will answer the first three subpart…

Q: in discretionary fiscal policy (e.g., taxes) and automatic stabilizer ployment insurance benefits)…

A: Government changes the policy to bring desired impact on the economy.

Q: The RBA decides to buy bonds and securities from commercial banks on the open market. Other things…

A: When RBA buys bonds in the open market, the money supply in the economy increases, as it buys…

Q: Negative interest rates. Is it possible to have promised negative nominal interest rates? Why?…

A: During deflationary periods, people and businesses tend to keep money with themselves instead of…

Q: Imagine that you work for OstBank, a fictional European bank, as part of the team that manages…

A: A repurchase agreement with a central bank is an agreement where the central bank agrees to loan out…

Q: Central Banks, such as the Reserve Bank of Australia (RBA), typically employ contractionary monetary…

A: Central banks carry out different monetary policies to decrease inflation and increase interest rate…

Q: To strengthen the dollar using sterilized intervention, the Fed would ____ dollars and…

A: Sterilized intervention is the purchase or sale of foreign currency by a central bank in order to…

Q: What is the bad result if a cashless society increases more private currency?

A: A cashless society is an economic situation during which financial transactions are administered…

Q: Why do you think banks are willing to offer savers higher rates of return if they agree to less…

A: Savers are those persons who deposit money in various deposit accounts for the purpose of earning…

Q: Banks improves the liquidity of the bank by

A: The correct answer is c. Generating additional income from investment

Q: If interest rates are expected to fall in the future, a hawkish fed will a. Sell treasury bonds to…

A: Whenever there is a increase or decrease in the interest rate by the government, it will impact the…

Q: Which of the following is most true?   The nominal rate of a government long-term security can be…

A: Risk free rate is the theroetical rate of return on the invested amount and security and it is…

Q: How does the creation of a Treasury STRIP help the government raise cash? Seleccione una: a. It does…

A: The separation of interest and principal amount on security and trading is also done separately then…

Q: Which of the following actions should Reece Windows take if it wants to reduce its cash conversion…

A: The cash conversion cycle includes the days allowed to the accounts receivable plus inventory days…

Q: A bank has a positive repricing gap. This implies that a. some RSAs are financed by fixed-rate…

A: Banks face different types of risks and repricing risk is one of them. This risk pertains to the…

Q: Why if your income is in local currency and you issue a bond in dollars, this might be a risky…

A: Issuing bonds in a foreign currency while earning income in a local currency can pose risks related…

Q: If a bank has , rate-sensitive assets than liabilities, then in interest rates will increase bank…

A: Lets understand the meaning of rate sensitive asset and liabilities. Rate sensitive asset and…

Q: what is the impact on the Loanable Funds Market

A: Loan-able funds are the amount or the funds available in the loan market for the borrowers. These…

Q: When both deposit and loan interest rates decrease at the same speed in the market, a bank tends to…

A: Loan interest rate is the rate at which interest is charged by bank on the lent amount. Deposit is…

Q: Show that the Ricardian Equivalence does not necessarily hold if the assumption of perfect credit…

A: Ricardo's equivalence is an economic theory that states that funding government spending from…

Q: Conside the following shocks to the bond market: (A) an increase in perceived risk, (B) an…

A: Bond Market and perceived risk: When the perceived risk goes up in the economy the bond yields shoot…

Q: Suppose now that the Federal Reserve wants to increase the monetary base by increasing bank reserves…

A: Open market operations versus discount loansConsider an expansionary open market operation. Suppose…

Q: If the Federal Reserve takes on a policy of monetary restriction, the supply curve for loanable…

A: If the Federal Reserve takes on a policy of monetary restriction, it typically means that the…

Q: Select all that are true regarding liquidity risk for a bank. O Consumer trust in the bank ensures a…

A: The answer is provided below.

Q: Match the correct type of bank risk with the appropriate associated statement. 1.The possibility…

A: Risk is referred as the possibility of the something bad happened. It also involves in an…

Q: Which statement is true of digital legal tender?

A: In simple words, digital currency means electronic currency. These currencies can be accessed only…

Q: Do you agree or disagree with the statement? Explain your answer. When the Treasury of the United…

A: It is right that the Treasury issuance of bonds to fund the deficit does not influence the money…

Q: c) In what three ways do commercial banks make a profit from the monetary system?

A: Note: This post has three distinct questions. The first has been answered below.

Q: Economic conditions in Fredland have caused the demand for money to increase which has changed the…

A: Bond is a type of security issued by entities and govt organization to its investors whereby the…

Q: Which of the following is not true     Large Value Transfer System is an electronic, real time net…

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: Only (b) and (c) are true.

A: Mark to market rule refers to the method in which fair values in the account which relate to the…

Q: Why is the Fed’s discount window considered the “lender of last resort” for some banks?

A: The “discount window” refers to the facilities that central banks are offering to commercial banks…

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.