macro test review

The bank has 200 million demand deposit and 150 million in reserves the reserve ratio is 20% what is the maximum amount of loans the bank and meat from this reserve

$110 million

If the required reserve ratio is 10 percent, what is the maximum change in the money supply from John's deposit of $50,000 cash into his checking account?

450,000

The annual inflation rate is expected to be 5 percent over the next 3 years. Juan plans to take out a 3-year loan to purchase an automobile. If Juan decides not to take out the loan if the real interest rate exceeds 3 percent, the highest nominal interest rate he is willing to pay is

8%

Assume that the reserve requirement is 10% and Maria deposits 1 million in cash into her checking account at First Bank the deposit will initially increase excess reserves at the bank by

900,000

A commercial bank's ability to create money depends on which of the following?

A fractional reserve banking system

If the loanable funds market is an equilibrium then which of the following must be true

Borrowing equals lending

changes in which of the following will change the money supply

Open market operations

Open market operations refer to which of the following activities

The buying and selling of government securities by the central bank

And economy is operating with significant unemployment a decrease in which of the following will most likely cause employment to increase and the interest rate to decrease

The central banks administered interest rates

Which of the following will most likely result in a lower real interest rate in a nation?

The citizens of the nation increase their savings for retirement.

An increase in investment demand for capital goods Accompanied by an increase in household savings want to sell and which of the following in the market for loanable funds

The equilibrium quantity of loanable funds will increase but the impact on the real interest rate is indeterminate

which of the following accurately describes the federal funds rate

The interest-rate that banks charge other banks for overnight loans

Which of the following is true when interest rates rise

The opportunity cost of holding cash increases

Is the central bank decreases administered interest rates which of the following will occur

The price of bonds will increase

which of the following changes will necessarily occur as a result of an increase in the nominal interest-rate

The quantity of money supplied that will decrease

If businesses become optimistic about the possibility of investments in an economy which of the following will happen in the loanable funds market in the short run

The real interest rate will increase

If businesses become optimistic about the profitability of investments in an economy, which of the following will happen in the loanable funds market in the short run

The real interest rate will increase

A central bank can increase the money supply by

buying government bonds on the open market

Country H his current domestic output is lower than its potential domestic output assume that the central bank now decreases its administered interest rates what will be the short run effects of the central banks action on cyclical unemployment and real income

cyclical unemployment will decrease in real income will increase

Assume that the reserve requirement for demand deposit is 20% and the bank holds no excess reserves and the public pools no currency if the banking system has limited reserves and the central banks sells 10,000 worth of government securities to commercial banks the total money supply will

decrease by 50,000

The federal reserve decreases the federal funds rate by

decreasing it's administered interest rates

Assume that the public health part of it's money in cash and the rest is checking accounts the bacon system has limited resources in the central bank lowers the reserve requirement from 60% to 8% of the money supply will

increase by less than double

to reduce inflation the central bank would most likely to

increase its administered interest rates

nominal interest rates and prices are of previously issued bonds will be affected in which of the following ways when the money demand exceeds money supply

nominal interest rates will increase and bond prices will decrease

Which of the following constitutes the largest component of the United States money supply (MI)?

paper money