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