The marginal revenue of the 11th item is: A monopolist sets price at a point on the _______ curve, corresponding to the rate of output determined by the intersection of ______. receivables. If the price of computers falls during a period when the average price level remains constant, which of the following has occurred? Ceteris paribus, if the Fed raises the reserve requirement, then: The lending capacity of the banking system decreases. Terms of Service. $$ d. the U.S. Treasury. Suppose the Federal Reserve buys government securities from the nonbank public. c. commercial bank reserves will be unaffected. Open-market operations occur when the Federal Reserve: a. buys U.S. Treasury bills from the federal government. When the Fed buys government Securities in the open market (a) bank reserves increase (b) bank reserves decline (c) money supply increases but bank reserves remain unchanged (d) money supply declines but bank reserves remain unchanged. The Baltimore banks regional federal reserve bank. b) Lowering the nominal interest rate. eachus, which of the following will occur if the Fed buys bonds through open-market operations? A. See Answer Ceteris paribus, if the Fed raised the required reserve ratio: Expert Answer d. The money supply should increase when _ a. If a market basket of goods cost $100 in the base year and $110 in a later year, then average prices have increased by: Keynes and classical economists disagree about whether: Government intervention should be used to correct business cycles. 1. The U.S. Treasury c. The U.S. Mint d. The federal government And involves: a. Quantitative easing b. \text{General and administrative expenses} \ldots & 500,000 \\ If the Federal Reserve commits to money supply growth of 2% per year and then the economy enters a recession, it would be time consistent to raise the growth rate to 5%. Use these flashcards to help memorize information. The use of money and credit controls to change macroeconomic activity is known as: Free . Currency circulation in the economy will increase since the non-bank public will have sold their securities. b. engage in open market purchases of government securities. B. taxes. B. expansionary monetary policy by selling Treasury securities. Acting as fiscal agents for the Federal government. a. increase, increase, sell b. increase, increase, buy c. decrease, decrease, buy d. decrease, If the Fed is following policies to reduce inflation, it is most likely to be: a. lowering interest rates b. raising the money supply c. lowering the money supply d. both lowering interest rates and, When the interest rate falls in the money market, the quantity of money demanded ______ and the quantity of money supplied _______. How would this affect the money supply? Working Paper No. d. equilibrium interest rate rises e. demand for money curve shifts leftward, If the Federal Reserve increases the rate of money growth and maintains it at the new higher rate, eventually expected inflation will [{Blank}] and the short-run Phillips curve will shift [{Blank}]. At what price per share did Wave Water issue common stock during 2012? The Board of Governors has ___ members,and they are appointed for ___ year terms. If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action: a. lowers both inflation and unemployment b. lowers inflation but raises unemployme, A sale of bonds by the Fed generates a. a decrease in the demand for money balances. A change in the reserve requirement affects: The money multiplier and excess reserves. When the Fed raises the reserve requirement, it's executing contractionary policy. Increase; appreciate b. For the federal deficit to be lowered, a) the federal gov't must decrease its spending and increase net exports. A. change the liquidity levels of banks. C. purchases government bonds to increa, Within the Federal Reserve, the organizational body that is responsible for conducting open market operations (i.e., the buying and selling of government securities) is the: a) FOMC, b) Board of Governors, c) Board of Directors, d) Federal Reserve Bank o, Assume that the required reserve ratio is 10%; banks hold no excess reserves, and the public holds all money in the form of currency. If the Fed is using open-market operations, will it, Key Concept: Open market operations When the Fed buys government securities, it a. It transfers money from spenders to savers. Cause a reduction in the dem. Suppose that the sellers of government securities redeem these checks drawn on the New York Fed for currency. Its marginal revenue curve is below its demand curve. c) borrow less from the Fed and, If Federal Reserve decides to decrease the money supply in the United States, what will happen to: 1) the interest rate 2) the level of investment spending in America 3) the level of GDP 4) the level of money demand 3) the U.S interest rate 4) the level o. They will increase. b. an increase in the demand for money balances. It creates money, it creates a transactions-account balance for the borrower, and the money supply increases. B. an exchange between a private bank and the Federal Reserve where the Fed buys or sells government bonds to private banks. The Fed is most likely to do this by: A. purchasing government bonds from the public B. selling government bonds to the public C. selling government bonds to the treasury D. purchasi, Which of the following tends to reduce the effect of the expansionary open market operation on the money supply? }\\ Change in Excess Reserve = -100000000. d) setting interest r, Suppose the Federal Reserve sells $30 million worth of securities to a bank. B. decreases the bond price and decreases the interest rate. a. Suppose further that the required reserve, Explain briefly: a. Name the three tools of monetary policy that the Federal Reserve System can do to combat inflation. E.the Phillips curve will shift down. Was there a profit or a loss for the year ended December 31, 2012? c. buys bonds from ban, The Federal Reserve's sale or purchase of government bonds is referred to as: a. open market operations b. credit rationing c. quantitative easing d. monetarism, If the Fed wants to increase the money supply through an open market operation, it will a. purchase government securities. (ii) instructs the New York Fed to sell government securities in the foreign exchange market. B. influence the discount rate. \text{Direct materials used} \ldots & \$ 750,000\\ If the Open-Market Committee of the Federal Reserve sells securities, this action tends to: a. decrease the money supply. When the Fed engages in open-market operations, the transactions are conducted by: a. the Open Market Desk at the Federal Reserve Bank of New York. Toby Vail. Now suppose the Fed lowers. [Solved] Ceteris paribus,if the Fed raises the reserve requirement,then: A) The money multiplier increases. You would need to create a new account. If the Federal Reserve increases the rate of money growth and maintains it at the new higher rate, eventually expected inflation will and the short-run Phillips curve will shift . a. decrease, downward b. decrease. Note The higher the reserve requirement, the less profit a bank makes with its money. B ) bond yields will fall 2) A negative output gap indicates that A) nominal GDP is below real GDP. \text{Net Credit Sales}&\text{\$\hspace{1pt}1,454,500}&\text{\$\hspace{1pt}1,454,500}\\ \end{array} B. buy bonds lowering the price of bonds and driving up the interest rates. (a) the money supply decreases, interest rates decline, GDP increases, and employment decreases (b) the money supply increases, interest rates increase, GDP decreases, 1) The Federal Reserve will lower short-run output by: a) Decreasing the money supply. a. decrease; decrease; decrease b. According to the monetarist view, the aggregate supply curve is: Vertical at the natural rate of unemployment. }\\ This action increased the money supply by $2 million. Increase; depreciate c. Decrease; de, Under expansionary monetary policy, the Federal Reserve increases the money supply, allowing the banking system to make additional loans - which increases the money supply even more - resulting in higher economic growth. b. the Open Market Desk at the Federal Reserve Board in Washington, D.C. c. the National Bureau of Economic, Suppose the Fed buys $10 billion of securities from the public and the public deposits the payment they receive from the Fed in their checking accounts at their commercial banks. The long-term real interest rate _____. \text{Accounts receivable amount}&\text{\$\hspace{1pt}263,000}&\text{\$\hspace{1pt}134,200}&\text{\$\hspace{1pt}64,200}\\ c. Increase the required reserve, Suppose the Federal Reserve s trading desk buys $500,000 in T-bills from a securities dealer who then deposits the Fed's check-in Best National Bank. What impact would this action have on the economy? D. all of the above. Our experts can answer your tough homework and study questions. Money is functioning as a standard of value if you: Compare the prices of running shoes online to those in a sporting goods store. With everything else held constant, how will each of the following change as the result of the Fed's policy action (increase, decrease, or no change)? Enter the effect of this open-market operation on Bank A's T-account, assuming that the proceeds from the p. If the Federal Reserve wants to decrease the money supply, it should: A. conduct open market purchases. B. d. lower reserve requirements. }\\ All rights reserved. b. a decrease in the demand for money. &\textbf{Original Categories}&\textbf{Categories Change}\\[5pt] Make sure you say increase or decrease/buy or sell. To decrease the money supply the Fed can: Raise the reserve requirement, raise the discount rate, or sell bonds. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases, If the Federal Reserve was concerned about the "crowding-out" effect, they could engage in: A. expansionary monetary policy by lowering the discount rate. d. an increase in the supply of bonds and a fal, When there is an excess supply of money: A. the Fed will decrease the money supply. d) decreases, so the money supply decreases. The Fed lowers the federal funds rate. Otherwise, click the red Don't know box. b. the Federal Reserve buys bonds on the open market. Suppose the Federal Reserve buys 100 mortgage-backed securities in the open market. c. real income increases. A change in the reserve requirement is the tool used least often by the Fed because it: * Can cause abrupt changes in the money supply. C. treasury bond operations. Michael Haines Suppose the Federal Reserve buys government securities from the non-bank public. Above equilibrium, this results in excess supply. \text{Total uncollectible? \text{Variable manufacturing cost per chainsaw} & \text{\$100}\\ b. c. B. increase the supply of bonds, decrease bond prices, and increase interest rates. If the Federal Reserve increases the nominal supply of money, all else equal: a. the demand for money increases. c. reduce the reserve requirement. B. purchases government bonds to decrease the money supply. An expansionary fiscal policy is when a. the government lowers spending and raises taxes. Ceteris paribus, if the Fed reduces the reserve requirement,thenMultiple Choicetotal reserves increase.the lending capacity of the banking system increases.total deposits decrease.the money multiplier decreases. All rights reserved. C. increase by $290 million. Suppose the Fed conducts $10 million open market purchase from Bank A. Ceteris paribus, if the Fed raises the reserve requirement, then: The lending capacity of the banking system decreases. Therefore the correct option is b: If the Federal Reserve increases the money supply, ceteris paribus, the rate of interest decreases. c. the interest rate rises and this. b. It allows people to obtain more goods than they can using money. What can be used to shift aggregate demand? If the Fed raises the reserve requirement, the money supply _____. Cost of finished goods manufactured. All other trademarks and copyrights are the property of their respective owners. b. it will be easier to obtain loans at commercial banks. Explain. Assume the reserve requirement is 5%. Let's say the Fed had raised interest rates by 1% before the family got a loan, and the interest rate offered by banks for a $300,000 home mortgage loan rose to 4.5%. The Federal Reserve uses open market operations to control the money supply when it A. issues government bonds to finance the federal government's deficit. Expansionary fiscal policy: a) decreases the money supply and raises interest rates. D. In open market operations, the Fed exchanges cash (money) for non-cash (bonds). The Fed wishes to increase the money supply it can, Economics Chapter 15 (BEST ALL THE ANSWERS), Sp 8 Unidad 1A - Un fin de semana en Madrid. D. conduct open market sales. We develop a model of price formation in a dealership market where monitoring of the information flow requires costly effort. What fiscal policy tools are used to shift the aggregate demand curve? If the number of dollars you receive every year is the same, but prices are rising, then your nominal income: Stays the same but your real income falls. Now suppose the Fed conducts an open market purchase of government bonds equal to $1, Fiscal policy is conducted by: a. }\\ b. money demand increases and the price level decreases. An increase in the money supply and a decrease in the interest rate. \textbf{ELEGANT LINENS}\\ Then, ceteris paribus, bank reserves _____ (increase, decrease, or do not change), currency in circulation _____ (increases, decreases, or does not change), and thus the monetary base will _____ (decrease or increase). a. mortgages; Bank of America b. government securities; New York Fed c. government securities; Federal Reserve Bank of Florida d. Mortgages; Federal Reserve. Assuming this, how is the Fed likely to respond to fiscal stimulus if the economy is nearing full employment? Explore how the Federal Reserve uses monetary policies to control the money supply and affect interest rates in an effort to prevent another depression from occuring. b. decrease, upward. Suppose the banks in the Federal Reserve System have $400 million in transactions accounts and the reserve requirement is 0.10. \end{matrix} b) an open market sale and expansionary monetary policy. Also assume the Federal Reserve conducts an Open Market Operations purchase of U.S. Treasury securities in the amoun, Assume that the Federal Reserve establishes a minimum reserve requirement of 12 %. a. During the year, the company started and completed 45 motor homes at a cost of $\$ 55,000$ per unit. c. means by which the Fed acts as the government's banker. c. prices to increase by 2%. a. a. increase the nominal interest rate and increase output b. decrease the n. To reduce interest rates, the Fed buys $500 of T-bills which increases the money supply by $2000. Open market operations. The Federal Reserve has a few main goals with respect to the economy: to promote maximum employment, keep prices stable and ensure moderate long-term interest rates. The information provided should help you work out why you missed a question or three! It involves the direct exchange of one good or service for another. c. Fed sells bonds. d. the money supply is not likely to change. - By buying and selling bonds through open-market operations - By buying and selling stocks - By setting the interes, Suppose the Fed decided to purchase $100 billion worth of government securities in the open market, directly deposited into the banking system. A. decreases; decreases B. decreases; increases C. increases; decreases D. increases. It needs to balance economic growth. c) buying and selling of government securities by the Treasury. Using the oversimplified money multiplier, the money suppl, Assume the reserve requirement is 10%. Holding the deposits or reserves of commercial banks. \end{array} to send you a reset link. d) borrow reserves from the Federal Reserve. 41. A. expands, higher, higher B. expands, higher, lower C. expands, lower, higher D. contracts, In the market for money, when the demand for funds increases, the interest rate _______ and the amount of money borrowed _______ . The price level to decrease c. Unemployment to decrease d. Investment to decrease. View Answer. c. engage in open market sales of government securities. Should the Fed increase or decrease the money supply? b. a. decreases; falls b. decreases; rises c. does not change; falls d. increases; rises e. increases; falls, At 3% unemployment which is likely to happen, the Federal Reserve should: A. sell bonds increasing the price of bonds and driving up the interest rates. }\\ c. When the Fed decreases the interest rate it p, Which of the following options is correct? b. the same thing as the long-term growth rate of the money supply. The Federal Reserve calculates and provides reserve balance requirements before the start of each maintenance period to depository institutions via the Reserves Central--Reserve Account Administration, which is available on the Federal Reserve Bank Services website. Generally, the central bank. Then required reserves are: If excess reserves are $50,000, demand deposits are $1,000,000, and the minimum reserve requirement is 5 percent, then total reserves are: Suppose a bank has $1,500,000 in deposits, a minimum reserve requirement of 20 percent, and total reserves of $350,000. If the FED sells $10 million worth of government securities in an open market operation, then the money supply can potentially: A. increase by $150 million. Aggregate demand will decrease or shift to the left. Inflation rate _____. If the Federal Reserve increases the nominal money supply by 5 % and real income increases by 2%, then we would expect: a. prices to increase by 5%. A) Increase money supply to decrease interest rates, increase i. Expansionary monetary policy: a) decreases government spending and/or raises taxes. In terms of pricing, which of the following is not true for a monopolist? The Treasury buys bonds in the open market c. The Fed reduces reserve requirements d. The Treasury sells b. As a result, the money supply will: a. increase by $1 billion. b. buys bonds from banks, which increases bank reserves. b. foreign countries only. In a graph of the aggregate demand curve, an increase in investment by businesses is represented by a: Ceteris paribus, which of the following changes in the aggregate demand curve best characterizes a cutback in exports? The Fed approved a 0.25 percentage point rate hike, the first increase since December 2018. Suppose during the same period average prices in the economy rose by 150 percent.The paintings owner, relative to those who do not own paintings, experienced a: Lower real wealth as a result of the wealth effect. c. an increase in the demand for bonds and a rise in bond prices. Why does an open market sale of Treasury securities by the federal Reser, Suppose the Federal Reserve wanted to increase the money supply: it could a. The buying and selling of government bonds by the Fed to control bank reserves and the money supply are operations known as a. Which of the following lends reserves to private banks?
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