Helicopter Money Primer: The possible next frontier in quantitative easing Central banks-the Fed, the Bank of Japan, the European Central bank, the People's Bank of China, and others-have bought trillions of dollars of bonds, The Fed alone has bought $4 trillion-worth. What are the Fed's policy tools and which policy tool did the Fed use to increase its assets to $4 trillion? The Fed's policy tools include O A. the required reserve ratio, discount rate, and government expenditure O B. extraordinary crisis measures, marginal tax rates, and the discount rate OC. open market operations, marginal tax rates, and government expenditure O D. the required reserve ratio, discount rate, and open market operations To increase its assets to $4 trillion, the Fed used O A. the discount rate O B. required reserve ratios O C. a printing press to print more currency O D. large-scale open market operations called quantitative easing

M10

1.5 Why do banks create money? Do they create money to help the Federal Reserve control the money supply or is there a more basic reason? Ippos Is transfer on MI and M2? red resent SAVALDAVATY A 100 000 of curre urrency

Bank A:Reserves on hand $38,000Deposit in the Fed $30,000US government bonds $12,000Checking account balances $120,000Savings account balances $25,000Bank B:Reserves on hand $50,000US government bonds $7500Savings account balances $20,000Checking account balances $100,000 In addition, people in this economy hold $8800 in cash, and all banks have the same reserve requirements we've used all semester. Calculate the (economy-wide) currency ratio, carefully following all numeric instructions. Do not convert the ratio into percent. In other words, if you get k of 0.99, enter only 0.99 in the blank.

Refer to table below. Suppose that the Fed had decided to set the U.S. money supply in December 1932 and in December 1933 at the same value as in December 1930.   a. Assuming that the values of currency held by the public and the reserve-deposit ratio had remained as given in the table, what should the values of bank reserves be to reach the stated target for the U.S. money supply?   Instruction: enter all responses rounded to two decimal places     Money Supply Currency held by public Reserve-deposit ratio Actual Bank reserves Needed Bank reserves December 1930 $44.1 billion $3.85 billion 0.075 $3.31 billion $3.31 billion December 1932 $44.1 billion $4.82 billion 0.109 $3.18 billion  billion December 1933 $44.1 billion $4.85 billion 0.133 $3.45 billion  billion   b. In order to accomplish this objective, the Fed would have had to conduct open market  purchases   to increase bank reserves by $ _______ billion in 1932 and $_________  billion in 1934.

Which quotation is irrelevant to the claim in paragraph 1 that "people have confidence that the money will hold its value because their government backs it"? "The Mint was charged with producing the nation's specie in copper, silver, and gold. O For the first 50 years or so, U.S. currency consisted almost entirely of coins." (paragraph 13) "Demand notes could be redeemed for silver or gold coins on demand and were legal tender guaranteed by the federal government." (paragraph 14) O "Most nations today back their own currencies as legal tender." (paragraph 15) O "Paper notes often consist of higher values than coins." (paragraph 15)

2.2

Breifly describe how the Fed creates bank reserves and more monetary transactions in the economy than the actual volume of currency issued by the federak reserve banks. Assume that the reserve requirment by the Fed on bank deposits is 1/10. Also assume that the bank under consideration have zero excess reserve (all ER is lent out). With fixed currency in circulation, what specific monetary policy tool can the Fed use to increase checking account deposits to 1,000 million?

The money stock measured as M1 is growing at the rate of 5% per year. If real GDP is growing at 2% per year, and the income velocity of circulation of money is constant, Select one: the economy will achieve noninflationary growth O b. the inflation rate will be around 1%. O c. the inflation rate will be around 5% O d. the inflation rate will be around 3%.

Table 14 shows the balance sheet of the Tenth National Bank Assets Liabilities Reserves $517 Deposits $4,136 Loans $3,619 Total: $4,136 Total: $4,136 Refer to Table 14. Assume that this bank lends out its entire excess reserves. If Jerry deposits $426 of cash in a checking account in the Tenth National Bank, what's the maximum change in the money supply in the economy? O $2,982 G O $3,408 O $3,696 O $4,200 O $4,136