Federal & Monetary Policy
Also increase and decrease
Suppose that a national government increased deficit spending on goods and services increasing its demand for loanable funds in the long run this policy would most likely result in which of the following changes in this country
Individuals holding a larger portion of their assets as cash
Thanks may not be able to create the maximum amount of money from my new deposit as a result of
Discount rate
The Federal Reserve can change the US money supply by changing
Decrease if interest rates increase
The amount of money that the public wants to hold in the form of cash will
Banks charge one another for short term loans
The federal funds rate is the interest rate that
Buying bonds on the open market
The federal reserve can increase the money supply bye
Increase decrease decrease
And open market purchase of bonds by the federal will most likely change the money supply the interest-rate In the unemployment rate in which of the following ways
Increase and decrease to the quantity demanded and the quantity supplied
Assume that a perfectly competitive financial market for laudable funds is in equilibrium which of the following is most likely to recur to the quantity demanded in the quantity supplied of loanable funds if the government puts a cap or ceiling on the interest-rate
80,000
Assume the required reserve ratio is .2 If a bank in initially has no excess reserves and $100,000 cash is deposited in the bank the maximum amount by which the bank may increase the loans is
Private investment due to increased borrowing by the government
Crowding out refers to the decrease in
Keep part of their demand deposits as reserves
Fractional reserve banking means that banks are required to
4000
How much is the excess reserves If the Fed buys $1000 of bonds
5000
How much is the excess reserves It's Bob deposit $1000
2000
How much is the required reserves If the Fed buys $1000 of bonds
2100
How much is the required reserves if Bob deposit $1000
1000
How much more can the bank initially lend out If the Fed buys $1000 of bonds
900
How much more can the bank initially lend out. If Bob deposits $1000
20 percent
If on receiving a checking deposit of $500 a banks excess reserves increased by $400 they require reserve must be
Increased by $300 increase by $30
If required reserves is 10 percent and the bank receives a new demand deposit of $300 which of the following will most likely occur in the banks balance sheet
Interest-rate's
If the Fed institutes a policy to reduce inflation which of the following is most likely to increase
There will be a movement to the left along the short run Phillips curve
If the Federal Reserve conducts an open market purchase of bonds we can expect which of the following to occur in the short run
Increase and decrease in interest rates in real GDP
If the Federal Reserve raises the discount rate how are interest rates in real GDP affected
Decrease the money supply by up to 1.6 million
If the reserve Requirement is 25 percent in banks hold no excess reserves and open market sale of $400,000 of government securities by the Federal Reserve will
Decrease and increase of real interest rates and investment
If the supply for loanable funds increases what will happen to the real interest rates and investment
Putting money into a savings account
If you use money as a store value you would be
Increase and decrease
In the short run which of the following would occur to bond prices and interest rates if a central bank Bought bonds through open market operations
900×10 = 9000
Maximum change in money supply from deposit. If Bob deposits $1000
1000 also
Maximum change in request preserves all banks If the Fed buys $1000 of bonds
Also 10,000
Maximum change in the demand deposits all banks If the Fed buys $1000 of bonds
10,000
Maximum change in the money supply If the Fed buys $1000 of bonds
The government purchases and sales of municipal Buns for K- 12 education
Open market operations referred to which of the following activities
Unit of account
The price for a ticket to the Super Bowl is $500 this statement best illustrates money used as a
The required reserve ratio is low and the interest-rate has a large affect on investment spending
The purchase of bonds by the Federal Reserve will have the greatest effect on real gross domestic product if which of the following situations exists in the economy
Raise the reserve requirement and the discount rate
To counter act a recession the Federal Reserve should
Sell bonds on the open market
To illuminate an inflationary gap the Federal Reserve mightBuying bonds on the open
.1 or 10 percent
What is the required reserve ratio
Lower interest-rate's and more investment
When an economy is at full employment and expansionary monetary policy will lead to
Speculation
When consumers hold money rather than bonds because they expect the interest rate to increase in the future they are holding money for what purpose
80 crease in the real rate of interest
When in economy is at full employment which of the following will most likely create demand pull inflation in the short run
One in three only demand deposits and vault cash
Which of the following is an asset for the MBHS Bank
A source of intrinsic value or a standard of deferred payment
Which of the following is not a function of flat money
Saving deposits
Which of the following is not a part of M1
There is an inverse relationship Between nominal interest rate and quantity of money demanded
Which of the following is true for the money market graph
Interest rates will increase
Which of the following would most likely occur in an economy if more money is demanded then is supplied
Stay the same
Will M1 money supply initially increase decrease or stay the same
