27. Which are functions of the Federal Reserve System?   I. conducting monetary policy II. examining and supervising commercial banks in the Fed regions III. providing liquidity to financial institutions   A) I, II, and III   B) II only   C) III only   D) I only

Q: Table 2 Bank of Duluth Assets Liabilities Deposits Reserves $19,200 $240,000 Loans 220,800 Refer to…

A: A bank holds some of the deposits as reserves and loans out the rest.

Q: 73. What is the reserve requirement for Canadian banks? (A) 0 percent. (B) 0.01 percent. (C) 4.5…

A: Money supply refers to the amount of money available in an economy at a particular time. The money…

Q: QUESTION 3 One view of the role of Banks is that they create liquidity. What does this liquidity…

A: Commercial banks plays a significant role in the growth of an economy as it creates liquidity to…

Q: Question 13 Which of the following will yield to a bank the lowest return? O Short term loans with…

A: Question 13)  The loans with little risk yields the low returns because the returns were directly…

Q: 9. Assume the central bank has an established reserve requirement of 10%. It then decides to lower…

A: Here, it is given that the current required reserve ratio is 10% and central bank decided to…

Q: 22. In an economy, if uncertainty about the health of banks causes depositors to start withdrawing…

A: Banking crisis: It can be defined as when many people borrow money from the banks but are unable to…

Q: 15. Banks normally hold few excess reserves because this practice is: not recommended by the Fed…

A: Bank refers to the financial organization having the license for receiving deposits and making…

Q: 5. A. What are the 3 goals of monetary policy and what is the importance of each of the goals? B.…

A: A.) Monetary policy is tools available to the government in order to control the money supply and…

Q: 7. Explain the tools of Monetary Policy. With a table and example?

A: Monetary policy is a set of tools that a country's central bank can use to encourage long-term…

Q: 10. The discount rate and the federal funds rate The discount rate is the interest rate on loans…

A:

Q: 8. If the central bank carries out an open market operation and buys government securities, the…

A: In an economy, any purchase or sale of government securities by the Central Bank has a significant…

Q: 1. Requiring banks to hold a certain level of cash reserves, insuring deposits, and lending to banks…

A: Central bank or federal bank (in the US) refers to the national bank of a country which provides…

Q: 7) Explain the slopes of the supply and demand curves in the federal funds market.  Show and explain…

A: Federal fund rate: It is the interest rate at which banks and other depository institutions lend to…

Q: Graph the Federal Funds market before and after the Federal Reserve's response to the crisis. Note…

A: Fund Rate = 1% Discount rate = 2% Interest on reserves = 0.5%

Q: 7) Explain the slopes of the supply and demand curves in the federal funds market.  Show and explain…

A: Federal Reserve is the central bank of the United States.Federal funds market is the market for…

Q: 6- The BASIC financial system has a required reserves ratio of 15 percent; initial excess reserves…

A: Money multiplier can be calculated as follows: The money multiplier is 6.67 and the amount of…

Q: 14. Suppose nominal GDP is $17.5T and the M2 money supply is $9.72T. What is the M2 velocity of…

A: According to the quantity theory of money, the price level in an economy changes proportionally with…

Q: 8. A factor that might have contributed to the weakening of the U.S. economy in 2007-2009 was A.…

A: The period required to recover from the recession made it special because the subprime loan was the…

Q: List the names of the current chairperson of the Federal Reserve and members of the Board of…

A: Since there are multiple questions posted here, the first one only will be answered in this session.…

Q: 6. Which of the following instruments is not used by the Federal Reserve to change the money…

A: Money is important for all the countries of the world. With money, trade takes place and with money…

Q: 9. The discount rate and the federal funds rate The discount rate is the interest rate on loans that…

A: In the banking system, different types of interest rates are imposed by the central bank from…

Q: 10. The primary purpose of the legal reserve requirement is to: * O prevent banks from hoarding too…

A: Banks: It refers to the system that helps in making the economy more powerful and stable. The banks…

Q: 10. The discount rate and the federal funds rate The discount rate is the interest rate on loans…

A: Discount rate is the interest rate charged by the Federal Reserve to commercial banks and other…

Q: 1- Which of the following are the three powers of the Federal Reserve Bank? (Indicate all that…

A: Federal Reserve bank regulating the bank other financial institution to maintain the economy better…

Q: 20. The key mechanism of monetary policy is the: A) Federal Reserve System's control over taxes. B)…

A: Monetary policy is the macroeconomic policy adopted by the monetary authority i.e. central bank in a…

Q: 5. The Federal Reserve's organization There are Federal Reserve regional banks. Which of the…

A: Monetary policy pursued by the federal reserve of USA is essential part of policy measures to tackle…

Q: Graph the Federal Funds market before and after the Federal Reserve's response to the crisis. Note…

A: As given fund rate is 1%  discount rate is 2% interest on reserve is 5% Federal Reserve Rate is…

Q: Refer to Table A. The Fed would have to increase the reserve requirement to what percentage for this…

A: The economics as a study is based upon the idea that the resources with the economies are limited,…

Q: 1) Explain the functions of Money and the role of the Federal Reserve in regulating the economy…

A: Anything which is used as a medium of exchange is known as money.

Q: 26) The seven members of the Board of Governors of the Federal Reserve are appointed by A) Congress.…

A: The  appointment of the seven members of the board of governors is done by the president of the…

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.