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- The required reserve ratio is 5%. The money multiplier is Group of answer choices 15. 5. 0.5. 20.it required reserve ratio (RRR) is 25%, the money multiplier isAs a result of this flight to liquidity, the interest rate in the 20-year Treasury bonds market ________________ ( decreases/ remains the same/ increases) , while the interest rate in the T-bill market ________________ ( decreases/ remains the same/ increases) . Consequently, the default risk premium spread ________________ ( decreases/ remains the same/ increases)
- In a scenario where market interest rates suddenly increase by 2%, for which bank will gap analysis give a misleading answer about what will really happen, compared with a careful simulation analysis? Question 2 options: Bank Y, where most of its deposits are $100,000+ CDs and brokered deposits Bank X, where most of its deposits are small checking and savings accountsIn defining money as M1 economists exclude time deposits on the grounds that _________. a. the intrinsic value of time deposits is nothing. b. the purchasing power of time deposits is much less stable than that of demand deposits and currency. c. they are not directly or immediately a medium of exchange. d. they are not recognized by the government as legal tender. e. They are quantitatively negligible as compared to checkable deposits.25. If the money multiplier is 4, the required reserve ratio is: 2%. 20%. 25%. 50%.
- The Federal Reserve conducts a $30 million open-market purchase of government bonds. If the required reserve ratio is 15 percent, the largest possible increase in the money supply that could result is million, and the smallest possible increase is million.The ratio of cash and other assets that can be readily turned into cash to the total of deposits is the A) liquidity ratio. B) money multiplier. C) credit limit. D) none of the above14. Each of the seven governors of the Federal Reserve Board is appointed by the president and confirmed by the Senate to serve Question 14 options: a) as long as the appointing president remains in office. b) 7 year terms. c) 14 year terms. d) 4 year terms.
- Let M subscript t denote the initial money supply. A friend of yours does not trust banks and keeps all his money in cash. He buys an old car for $20,000. The seller deposits the money in her checking account in Citibank. The bank keeps 10% of the deposit in reserve and lends the rest to Jack. Jack keeps $1,000 in cash and spends the remainder on NVIDIA stock. The seller of the stock, Jane, transfers the whole amount to her checking account in Wells Fargo. Wells Fargo keeps 20% of the amount in reserve and lends to rest to Joshua. Joshua keeps $1,600 in cash and spends the rest on treasury securities. The seller of the securities happens to be the Fed. A fire in Joshua's uninsured house destroys $600 of his cash. Let M subscript t plus 1 end subscript denote the resulting money supply. Calculate the change in the money supply, M subscript t plus 1 end subscript minus M subscript t.The current Fed Funds rate band is 0.0%/year - 0.25%/year. If the Federal reserve wanted to set their policy rate to 0.25%/year using a 3-day reverse repo transaction, how much would a commercial bank pay to buy back $43 million worth of bonds?All of the following except one are functions of the Bank of Canada. Which is the exception? Multiple Choice:- a) It is auditor and inspector of the commercial banks. b) It is the regulator of the money supply. c) It is the sole issuer of currency. d) It ensures that the commercial banks remain profitable. Please explain shortly reasons for correct option and other options.
