Problems and Applications Q11 Assume that the reserve requirement is 16 percent. Also assume that banks do not hold excess reserves and there is no cash held by the public. The Federal Reserve decides that it wants to contract the money supply by $75 million using open-market operations. In order to accomplish its goal, the Fed needs to       million worth of bonds.

If the Federal Reserve purchases $100 million worth of government securities in open market operations, what is the maximum amount of change in the money supply if the reserve requirement is 8% and banks hold no excess reserves? Group of answer choices   Decrease by $1.25 billion   Increase by $1.25 billion   Decrease by $1.15 billion   Increase by $1.15 billion

If the Fed sells $2 million of bonds to the First National Bank, what happens to reserves and the monetary base? Complete the T-accounts below to explain your answer. Reserves Securities First National Bank Assets Liabilities Securities Federal Reserve System Assets Liabilities Reserves

The Fed can put more reserves into the banking system by:   Group of answer choices Purchasing government securities Increasing the discount rate Selling government securities Lending to nonbank

Assuming that banks lend all of their access reserves and people deposit all of their money, what will the Fed have to do in order to increase the supply of money by $120 billion if the Required Reserves Ratio is .20? Select one: a. It needs to buy $20 billion dollar worth of bonds from banks b. It needs to buy $24 billion dollar worth of bonds from banks c. It needs to sell $20 billion dollar worth of bonds from banks d. It needs to sell $24 billion dollar worth of bonds from banks e. It needs to sell $40 billion dollar worth of bonds from banks

Assume the Fed sells $32,140 worth of U.S. Treasury bonds to the First National Bank. Assuming that the required reserve ratio is 10.5 percent, then the money supply in the economy will ultimately: decrease by a maximum of $32,140. decrease by a maximum of $28,765. decrease by a maximum of $257,120. decrease by a maximum of $306,095. decrease by a maximum of $273,955.

What happens to the money supply if the Fed decreases the reserve requirement? Group of answer choices It increases It decreases There is no change It doubles

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BUSN5 CH2 WKSMultiple ChoiceIdentify the choice that best completes the statement or answers the question.1. Define economics.a) a financial and social systemb) the study of a country’s overall economic issuesc) the integration between consumers, families, and businessesd) the study of the choices that different entities make in allocating resources2. Macroeconomics focuses ona) the major issues facing the national economy, but has little or no relevance to individuals.b) smaller economic units such as individual consumers, families, and individual businesses operating within the economy.c) the major issues facing the national economy that may seem abstract, but directly affect an individual’s day-to-day life. d) the role of government, while microeconomics focuses on the private sector.3. After the collapse of the dot com bubble and the 9/11 terrorist attacks, the stock market depreciated and unemployment increased leading many to fear that the…

When the Fed wishes to decrease the money supply, it can   a. increase the required reserve ratio.   b. decrease the required reserve ratio.   c. ask people to buy more bonds.   d. turn additional funds over to the Treasury.