Money demand c. Investment spending d. Aggregate demand e. The equilibrium level of national income, When the expected inflation rate falls, the real cost of borrowing ______ and bond supply ______, everything else held constant. B) means by which the Fed acts as the government's banker. A change in government spending, a change in taxes, and monetary policy. b. Also assume that banks do not hold excess reserves and there is no cash held by the public. The money multiplier is equal to ______ and the reserve ratio is equal to _____%. b. increase the supply of bonds, thus driving down the interest rate. For best results enter two or more search terms. A) increases; supply. Assume central bank money (H) is initially equal to $100 million. D. interest rates will increase. Assume the reserve requirement is 5%. The aggregate demand curve should shift rightward. e. raise the reserve requirement. By raising or lowering the _______, the Fed changes the cost of money for banks, which impacts the incentive to borrow reserves. a) Given the required reserve ratio, RR/D=0.10, the excess reserves to deposits ratio, ER/D=0.06, the currency to deposits ratio, Assume that any money lent by a bank is always deposited back in the banking system as a checkable deposit and that the required reserve ratio is 15%. Which transfer prices should the Burton Company select to minimize the total of company import duties and income taxes? eachus, which of the following will occur if the Fed buys bonds through open-market operations? Suppose that the sellers of government securities deposit the checks drawn on the New York Fed into their bank account. b. a decrease in the demand for money. Using the oversimplified money multiplier, the money suppl, Assume the reserve requirement is 10%. An increase in the reserve ratio: a. increases the money multiplier. . 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 %. 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}]. (Income taxes are not included in the computation of the cost-based transfer prices.) An industry in which many firms produce similar products but each firm has significant brand loyalty is known as: Which of the following is characteristic of a perfectly competitive market? Cause an excess demand for money and a decrease in the rate of interest. If the Federal Reserve wants to decrease the money supply, it should: a. b. means by which the Fed supplies the economy with currency. b. engage in open market purchases of government securities. c) overseeing the buying and selling of government securities in the open market. 1015. &\textbf{past due}&\textbf{past due}&\textbf{past due}\\[5pt] Ceteris paribus, if the Fed reduces the reserve requirement ratio, then: A) The lending capacity of the banking system increases. &\textbf{0-30 days}&\textbf{31-90 days}&\textbf{Over 90 days}\\ b. increase the supply of bonds, thus driving down the interest ra, If the Fed begins to buy treasury bills to counter a recession, we would expect to see an increase in the a. demand for money. d. The Federal Reserve sells bonds on the open market. Acting as fiscal agents for the Federal government. \end{array} b. foreign countries only. According to the monetarist view, the aggregate supply curve is: Vertical at the natural rate of unemployment. The aggregate supply curve is positively sloped because as the price level increases: Profit margins increase in the short run. c. it borrows money, Consider how the following scenario would affect the money supply and, as a result, interest rates in the economy. The Fed approved a 0.25 percentage point rate hike, the first increase since December 2018. b. c. the government increases spending and lowers taxes. 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. You would need to create a new account. If the Fed decides to engage in an open market operation to increase the money supply, what will it do? Its marginal revenue curve is below its demand curve. C. the Fed is seeking, All else equal, if the Federal Reserve decreases the money supply, interest rates will _ and the dollar will _ against other currencies. (a) money supply increases, investment increases, aggregate demand increases (b) money supply increases, the interest rate increases, If the Fed increases the money supply to bring down the federal funds rate: A. b. A Burton marketing division in Lille, France, imports 200,000 chainsaws annually from the United States. U.S.incometaxrateontheU.S.divisionsoperatingincome40%FrenchincometaxrateontheFrenchdivisionsoperatingincome45%Frenchimportduty20%Variablemanufacturingcostperchainsaw$100Fullmanufacturingcostperchainsaw$175Sellingprice(netofmarketinganddistributioncosts)inFrance$300\begin{matrix} Price falls to the level of minimum average total cost. If the Federal Reserve increases the money supply, ceteris paribus, the: a. rate of interest is unaffected. Michael Haines \text{Total per category}&\text{?}&\text{?}&\text{? If the firm wants to sell one more carton of eggs, the firm: A flat or horizontal demand curve for a firm indicates that: If a perfectly competitive firm wanted to maximize its total revenues, it would produce: As much output as it is capable of producing. The capital account surplus will increase. 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) Required reserves decrease. "The federal bank can use open market operations as an instrument of monetary policy to manipulate interest rates and control supply of money." 2) If, If the Fed increases the supply of money in the market, bond prices will and interest rates will. raise the discount rate. A decrease in the reserve ratio will: a. The following is the past-due category information for outstanding receivable debt for 2019. In the money market, an excess demand of money will: A. increase the supply of bonds, increase bond prices, and decrease interest rates. d. sells U.S. Treasury bills to the federal government. Suppose government spending increases. a. 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%. c. means by which the Fed acts as the government's banker. D. change the level of reserves it holds for banks. a. increase the supply of bonds, thus driving up the interest rate. are in the same box the next time you log in. Money is functioning as a store of value if you: Put it in a savings account so you can buy a new car next summer. D. conduct open market sales. a) decrease, downward b) decrease, upward c) inc. In the market for reserves, if the federal funds rate is above the interest rate paid on excess reserves, an open market sale ________ the ________ of reserves, causing the federal funds rate to increase, everything else held constant. Learn more about the Federal Reserve's control methods and examine contractionary and expansionary monetary policies. Suppose the bond market and the money market both start out in equilibrium and then the Federal Reserve increases the money supply. __ Money paid to stockholders from earnings of a corporation. When the Federal Reserve makes an open market purchase, the Fed: buys securities from banks and the public, which will decrease tha. The equilibrium price level and equilibrium output should both increase. Total reserves increase.B. then the Fed. CBDC Next-Level: A New Architecture for Financial "Super-Stability" by. The result is imperfect monitoring, which creates profit opportunities for speculators, who do not act as dealers but simply The current account deficit will increase. The central bank uses various monetary tools such as open market operations, the Fed's fund rate, and reserve requirements to achieve its goals. In terms of pricing, which of the following is not true for a monopolist? If the required reserve ratio is nine percent, what is the resulting change in checkable deposits (or the money supply) if we assume there are no. ceteris paribus, if the fed raises the reserve requirement, then: Posted on . a. Which of the following lends reserves to private banks? B. the Fed is concerned about high unemployment rates. d. the money supply is not likely to change. b. the money supply is likely to decrease. This causes excess reserves to, the money supply to, and the money multiplier to. b. increase the money supply. Suppose that the sellers of government securities deposit the checks drawn on th. The supply of money increases when: a. the value of money increases. 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. decreases; decreases B. decreases; increases C. increases; decreases D. increases. a) Describe what initially happens to the reserves of bank A, Open market operations refer to A. the buying and selling of government bonds by the Fed. c. the money supply and the price level would increase. 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 Ban, Which of the following is the basic economic policy function of the Federal Reserve Banks? In response, people will a. sell bonds, thus driving up the interest rate. U.S.incometaxrateontheU.S.divisionsoperatingincomeFrenchincometaxrateontheFrenchdivisionsoperatingincomeFrenchimportdutyVariablemanufacturingcostperchainsawFullmanufacturingcostperchainsawSellingprice(netofmarketinganddistributioncosts)inFrance40%45%20%$100$175$300. 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. If the market price was below the ATC and at the current firm's rate of production the MC was less than the market price an increase in output would: increase profit but economic profits would still be negative. Which of the following is consistent with what Keynes believed? Buying securities in open market operations is a tool used by the Federal Reserve to increase the money supply in the economy, thus encouraging economic growth. B.bond prices will fall, and interest rates will fall. a. increases, rises b. increases, falls c. decreases, falls d. decreases, does not change e. . When the Federal Reserve System buys government securities on the open market: A. the money supply will decrease. Demand; marginal revenue and marginal cost. U.S. goods are less expensive for Americans so they buy fewer imports and more domestic goods. b. decrease the money supply and decrease aggregate demand. 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. b. decrease, upward. B) The lending capacity of the banking system decreases. It is considered to be less efficient for an economy than the use of money. Open market operations. C) buying and selling of government s. In carrying out open market operations, the Federal Reserve usually buys and sells U.S. Treasury securities. c. They wil, If the Federal Reserve buys bonds on the open market then the money supply will a. increase causing a decrease in investment spending shifting aggregate demand to the right. d. prices to remain constant. Assuming this, how is the Fed likely to respond to fiscal stimulus if the economy is nearing full employment? If the price of computers falls during a period when the average price level remains constant, which of the following has occurred? If the economy is currently in monetary equilibrium, an increase in the money supply will a. 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. a) Describe what initially happens to the reserves of bank B. b) If bank B does not want to hold excess reserves, w, Suppose that the Fed undertakes an open market purchase of $25,000,000 worth of securities from a bank. d. rate of interest increases.. The number of deposit dollars the banking system can create from $1 of excess reserves. What fiscal policy tools are used to shift the aggregate demand curve? $$ a. decrease, downward. a. decrease; decrease; decrease b. Increase the reserve requirement C. Buy government securities D. Decrease the discount rate, When the Fed successfully decreases the money supply, GDP options: a. increases because the resulting increase in the interest rate leads to a decrease in investment b. increases because the resul, If the Fed wants to raise the interest rate, in the short run in the money market, the Fed: a) decreases the quantity of money b) increases the quantity of money c) shifts the demand for money curve leftward d) shifts the demand for money curve rightward, The Federal Reserve is becoming more cautious about rising inflationary pressure. Ceteris paribus, if the Fed raises the reserve requirement, then: The lending capacity of the banking system decreases. The Federal Reserve Bank b. Determine the December 31, 2012, balances in Wave Waters shareholders equity accounts and total shareholders equity on this date. When aggregate demand exceeds the full-employment level of output, the result is: LEFT ARROW - move card to the Don't know pile. Which of the following is NOT a possible source of last-minute reserves for a private bank? a. C. influence the federal funds rate. The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is referred to as: Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term so that they: Make their decisions based on economic, rather than political, considerations. A sale of treasury bills by the federal reserve _____ interest rates and _____ the money supply. View Answer. Some terms may not be used. d. the U.S. Treasury. It also raises the reserve ratio. The company has marketing divisions throughout the world. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. \text{Direct labor} \ldots & 800,000\\ 26. Would the effect on aggregate demand be larger if the Federal Reserve held the money supply constant in response or if the Fed were committed to maintaining a fixed interest rate? The price level to decrease c. Unemployment to decrease d. Investment to decrease. 1. **Instructions** a. Raise the reserve requirement, increase the discount rate, or . A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each. All persons over age 16 who are either working for pay or actively seeking paid employment refers to: Who is an example of a part of the labor force? Suppose the banks in the Federal Reserve System have $400 million in transactions accounts and the reserve requirement is 0.10. lower reserve requirements.I and III onlyCurrently the Fed sets monetary policy by targetingthe Fed funds rate From October 1983 . b. Compute the following for the current year: In the short run, if the Fed wants to raise the federal funds rate, it: (i) instructs the New York Fed to sell government securities in the open market. \text{Accounts receivable amount}&\text{\$\hspace{1pt}232,000}&\text{\$\hspace{1pt}129,000}&\text{\$\hspace{1pt}100,400}\\

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