Consider the following developments which happened at the same time: Households reduced their currency holding in favor of bank deposits by $1 million and the Fed purchased a $1 million Treasury Bill from the U.S. Government. What is the immediate or initial effect of these two actions on the money supply (M2)? A) M2 will increase by $1 million B) M2 will remain the same C) M2 will decrease by $1 million D) M2 will increase by $2 million

Figure 31-3 On the following graph, MS represents the money supply and MD represents money demand. VALUE OF MONEY 0.6 0.45 5000 MS, MS 9000 QUANTITY OF MONEY MD Refer to Figure 31-3. Which of the following events could explain a shift of the money-supply curve from MS₁ to MS2? An increase in the value of money A decrease in the price level An open-market purchase of bonds by the Federal Reserve The Federal Reserve sells bonds

The Federal Reserve and the money supply Suppose the money supply (as measured by checkable deposits) is currently $300 billion. The required reserve ratio is 25%. Banks hold $75 billion in reserves, so there are no excess reserves.   The Federal Reserve (“the Fed”) wants to decrease the money supply by $32 billion, to $268 billion. It could do this through open-market operations or by changing the required reserve ratio. Assume for this question that you can use the simple money multiplier.   If the Fed wants to decrease the money supply using open-market operations, it should   ______(buy/sell) $_________    billion worth of U.S. government bonds.   If the Fed wants to decrease the money supply by adjusting the required reserve ratio, it should ______(increase/decrease)   the required reserve ratio. THis is one question . please answer with an explanation.

8. Consider a hypothetical economy with a nominal GDP of $1.2 trillion, real GDP of $600 billion, and money supply of $60 billion. Suppose commercial banks are required to maintain a reserve requirement of 10% of deposits. Assume that banks do not hold excess reserves. a) Calculate the money multiplier for this economy. If the central bank buys $1 billion of government bonds, what is the effect on money supply? Show your work. b) Using the quantity theory of money, calculate the price level and the velocity of money for this economy prior to central bank action. Show your work. c) Assume that velocity is constant and real GDP increases by 2% each year. What will happen to nominal GDP and the price level next year if money supply does not change? Show your work. d) In (c), what money supply should the central bank set next year to keep the price level unchanged? Show your work. e) In (c), what money supply should the central bank set next year if it wants inflation of 5%? Show your…

Please show equation: If the required reserve ratio (RRR) in the U.S. is 40 percent and Allen gathers $10,000 from cash sales and deposit the money into his U.S. National Bank checking account, then the change in the U.S. money supply should be     Answers: A.  No change   B.  A $4,000 increase   C.  A $15,000 increase   D.  A $25,000 increase

Currency in Circulation (October 2020) 40.5 billion Nigerian currency Reserves (October 2020) 34.2 billion Nigeriancurrency M1 (October 2020) 2,465.9 billion Nigeriancurrency M2 (October 2020) 2,638.8 billion Nigeriancurrency Calculate the size of the actual money (M2) multiplier in October 2020.  Round your answer to one decimal place.   Nigeria's central bank, N. Bank, has not set a required reserve ratio (you can treat the required reserve ratio as 0%).  Calcuate the excess reserve ratio for Norway in October 2020.  Enter your answer in percent form without the percent sign.  Round to one decimal place.

The reserve requirement is 10%. Suppose that the Fed purchases $50,000 worth of U.S. government securities from a bond dealer, electronically crediting the dealer's deposit account at Reliable Bank. Which of the following correctly describes the immediate effect of this transaction? A. The required reserves of Reliable Bank increase by $50,000. B. The total reserves of Reliable Bank increase by $50,000. C. Reliable Bank can make $50,000 in new loans. D. The excess reserves of Reliable Bank increase by $50,000. -ம்

The following diagram shows the Money Market for a hypothetical economy. Suppose that the economy begins with a Money Supply (Ms) of $300 million, and an equilibrium interest rate of 5.0%. Finally suppose that the required reserve ratio (rr) is 15%. Use the scenario to answer Questions 10 to 13. Interest rates (i) 5.5% 5% 4.5% Ms O increase the money supply $10 million O increase the money supply $100 million O decrease the money supply $300 million O decrease the money supply $200 million O decrease the money supply $100 million $200 $300 $350 Mp Quantity of Money (millions) Suppose that the Central Bank wished to raise the equilibrium interest rate up to 5.5%. In order to achieve this, it would need I to

Suppose a central bank has a required reserve ratio of 6.6% for all banks and the central bank changes reserves at one of these banks by $536.  By how much will the money supply change, at most, after all the effects of the money multiplier?  (Round this to two digits after the decimal and enter this value as either a positive value or a negative value without the dollar sign.)

9. Changes in the demand for money and and monetary policy Suppose interest rates increased. Adjust the following graph to illustrate the described change. INTEREST RATE Money Supply QUANTITY OF MONEY MD₂ As a result of an increase in interest rates, the equilibrium interest rate does not change. The level of foreign direct investment Central banks' holdings of the currency Foreign demand for a country's goods The discount rate MD₁ Money Demand Money Supply rises Which of the following factors may also be responsible for a shift in the money demand curve? Check all that apply. and the equilibrium quantity of money