In 2019, The Fed was liquidating their balance sheet (meaning they were selling off the bonds and securities purchasedin The Great Recession 2007-2009). That means they are trying to do what in regards to the supply of money.O IncreaseO DecreaseO Create a money stream to increase supply of moneyO Increase their Capital Gains

Answered: In 2019, The Fed was liquidating their…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

If money supply increases 10%, and we assume a constant money velocity: O We should have a price increase of 10% in the short-run, and an output increase of 10% in the long-run. O We don't have enough data to answer. O Price and output increase by 10% in the long-run. O Price and output increase by 5% in the long-run. O We should have an output increase of 10% in the short-run, and a price increase of 10% in the long-run.
Which from the following variables is most likely to be an intermediate target of monetary policy? (Check all that apply.) O A. Discount rate O B. Open market purchases C. Real GDP growth O D. Monetary base O E. Federal funds rate O F. Unemployment rate G. Nonborrowed reserves O H. M2 M1 O O O O O
You are an economic adviser using the Fed model to analyze the economy. Now suppose that manufacturers in China face rising costs of rubber as an input. What is the effect on the economy? O an unchanged real interest rate, an unchanged output gap, and unexpected inflation a rise in the real interest rate, an unchanged output gap, and unexpected deflation O a rise in the real interest rate, rising output, and unexpected inflation an unchanged real interest rate, falling output, and unexpected inflation
The reserve requirement is 10%. Suppose that the Fed sells $100,000 worth of U.S. government securities from a bond dealer, electronically debiting the dealer's deposit account at Reliable Bank. Which of the following correctly describes the immediate effect of this transaction on the money supply? O A. The money supply decreases by $1,000.000. O B. The money supply decreases by $100,000. O C. The money supply decreases by $90,000. O D. There is no change in the money supply. O E. None of the above.
The central bank sold existing government securities in an open market operation. Which of the following changes is the most likely result of this action? Select one: a. The reserve requirement decreases. O b. The nominal interest rate increases. O c. The discount rate increases O d. Bank reserves increase.
Suppose that commercial banks do NOT hold excess reserves. When the Federal Reserve raises the reserve requirement, the money supply will because commercial banks can make loans. O shrink; more O shrink; fewer O grow; more O grow; fewer
50
Suppose that the reserve requirement for checkingdeposits is 10 percent and that banks do not hold anyexcess reserves.a. If the Fed sells $1 million of government bonds,what is the effect on the economy’s reserves andmoney supply?b. Now suppose that the Fed lowers the reserverequirement to 5 percent but that banks chooseto hold another 5 percent of deposits as excessreserves. Why might banks do so? What is theoverall change in the money multiplier and themoney supply as a result of these actions?
If the Bank of Canada sells Government of Canada Bonds in the open market, what will happen? O a. The money demand will shift to the right O b. The interest rates will fall Oc The monetary base and the money supply decrease O d. The monetary base and the money supply increase
Which one of the following statements is false? O A Liquidity preference model suggests that higher GDP growth leads to higher nominal interest rates. O B. The price-level effect of the growth of money supply leads to lower interest rates. OC. The liquidity effect of the growth of money supply leads to lower interest rates OD. Liquidity preference model suggests that when the bond markets is in excess supply, the money market is in excess demand
QUESTION 12 The dollar depreciates by 20 percent against the Euro. Powell should O Increase the monetary base by 20 percent Reduce the monetary base by 18 percent Reduce the moriey 22 percent. Do nothing Not enough information to answer this question QUESTION 13 Banks become more optimistic due to an improvement in the economy. The money multiplier increases by 10 percent. Powell should O Increase the monetary base by 20 percent O Reduce the monetary base by 8 percent O Reduce the money 22 percent O Do nothing O None ofthe above QUESTION 14 President Biden increases the government deficit to 10 percent of GDP. Powell should O Increase the money supply by 10 percent O. Reduce the money supply by 10 percent O Reduce the money supply by 12 percent O Do nothing O We do not have enough information to answer.
i io 0 Which point/s represent an equilibrium in the money market? O a. A and D O b. All of the above O c. A only O d. A and C во DE A Yo D C LMo ISO Y

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