ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Following the Great Recession, the Federal Reserve adopted a restrictive reserve policy. true falsearrow_forwardWhich of the following can be described accurately as “policy rates adjusted by the Fed?” (a) federal funds rate and interest on excess reserves; (b) discount rate and prime rate; (c) 31-day Treasury bill rate and the 30-year Treasury bond rate; (d) discount rate and 30-year mortgage interest ratearrow_forwardDecisions regarding purchases and sales of government securities by the Fed are made by the: Federal Deposit Insurance Commission (FDIC). Discount Committee (DC). Federal Open Market Committee (FOMC). Federal Funds Committee (FFC).arrow_forward
- With a current inflation rate of 1.8%, Real GDP = $23,450, and Potential Real GDP = $22,900, what is the appropriate Federal Funds Rate According to the Fed?arrow_forwardThe liquidity trap occurs when the demand for money Group of answer choices increases when interest rates fall. decreases when interest rates fall. is perfectly interest inelastic. is perfectly interest elastic.arrow_forwardSuppose The Fed lowers the reserve ratio requirement for banks to increase the money supply in an economy. Which of the following best describes why this may not have the desired effect on M1 and M2? A) The monetary base can at times be rigid to Fed policy. B) Pessimistic banks may hold onto reserves even though the required reserve amount is lower. C) Optimistic banks may lend out more reserves than anticipated. D) There might not be a strong market for loanable funds.arrow_forward
- When the Fed buys and sells U.S. government bonds in an effort to regulate the money supply, it is engaged in Multiple Choice O closed market practices. reserve equity strategy. open-market operations. federal fund rates adjustment.arrow_forwardBank two currently has $500 million in transaction deposits. The bank has $65 million in reserves. The Federal reserve requirement ratio is 12%. The bank's required reserves are _____________ and its excess reserves are _____________. $60 million; $0. $60 million; $5 million. $440 million; $5 million. $600 million; $60 million.arrow_forwardFederal funds are Loans by the Fed Deposits in the Fed Loans between banks Both (a) and (b) Both (b) and (c)arrow_forward
- A bank has an average balance of transactions accounts, August 10 to 23, of $824.46 million. The average balance in the cash account is $42.014 million over this period. The bank is carrying forward a deficit of $1.276 million from the last reserve period. The rules require no reserves to be maintained for the first $8.5 million, 3 percent for amounts between $8.5 million and $45.8 million, and 10 percent thereafter. If over the first 12 days of the current reserve maintenance period the average daily reserve held were $37 million, what does the bank need to hold as reserves over the last two days to meet the maximum reserve? $129.110 million. $125.552 million. $141.914 million. $135.690 million.. B. $111.453 million.arrow_forwardThe required reserve ratio is 5%. The money multiplier is Group of answer choices 15. 5. 0.5. 20.arrow_forwardWhich among the following is not a restrictive monetary policy operation? Select one: a) Selling securities b) Decreasing Reserves c) Increasing Reserves d) Increase in Bank rate e) None of the answers are correctarrow_forward
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