If the Fed makes an open market sale of​ $1 million of securities to a​ bank, how do the​ bank's reserves and excess reserves ​ change?   How do bank deposits and the quantity of money​ change? If the Fed makes an open market sale of​ $1 million of securities to a​ bank, the​ bank's reserves​ _______. Excess reserves​ _______.     A. ​increase; increase   B. ​decrease; decrease   C. ​increase; decrease   D. ​decrease; increase   Bank deposits​ _______ and the quantity of money​ _______.     A. ​increase; decreases   B. ​increase; increases   C. ​decrease; increases   D. ​decrease; decreases

Q: Suppose that the reserve requirement is 10% and that the Federal Reserve purchases $4 billion in…

A: Given the reserve requirement = 10% Purchase of bond = $4 billion

Q: Consider an economy in which the demand for money is of the formMt =(1/v) PtY        for t = 0, 1,…

A: To determine why the inflation rates differ in the two situations.

Q: 5. Suppose that this year’s money supply is $500 billion, nominal GDP is $10 trillion, and real GDP…

A: Hello, thank you for the question. Since there are multiple sub-parts in the question, only the…

Q: Price Level LRAS SRAS 108 100 90 ADT ADo AD2 16.4 17.4 18.2 Real GDP $T 1. If the actual price level…

A: The measure that depicts the difference between the potential output of the economy and actual…

Q: Suppose that this year’s money supply is £500 billion, nominal GDP is £10 trillion,  and real GDP is…

A: The money supply = 500 billion Nominal GDP = 10 trillion Real GDP = 5 trillion

Q: Question 2: Suppose the money supply is $50 in an economy where the nominal GDP is $1000, and the…

A: Here we calculate the following terms by using the given information so the calculation of the…

Q: After 2008, the Fed sets a target range that is for the federal funds rate. Select one: O 1…

A: The federal funds rate is the target interest rate which the Federal Reserve sets for the commercial…

Q: . Assume that the banking system has total reservesof $100 billion. Assume also that required…

A: Money multiplier is defined as how much money supply will change due to change in required reserve…

Q: Assume that the required reserve ratio is 20%. If the Fed sells $10 million worth of…

A: Answer: Required Reserve Ratio = 20% Sells $10millions Maximum change in money supply = change in…

Q: If an income elasticity of money demand is 3/4 and income increase 8%, by about how much does the…

A: Note:  We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Suppose that to finance its credit policy, the Fed pays an annual interest rate of 0.25 percent on…

A: Given,  The total amount of reserves held by banks with Fed = $1.3 trillion  Interest rate = 0.25 or…

Q: B. Will this increase the monetary base by $10 million, more than $10 million, or less than $10…

A: The Open Market Operation is one of the quantitative instruments of the monetary policy of the…

Q: 5) Suppose a computer virus disables the nation’s automatic teller machines , making withdrawals…

A: Part a)Liquidity preference is nothing but the desire to hold money in liquid form. This can broadly…

Q: Suppose that this year’s money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is…

A: Since there are multiple sub-parts in the question, only the first three sub-parts will be answered…

Q: 11. An increase in the money supply is most likely to have which of the following short-run effects…

A: When the rate of interest increases money supply will reduce and when the rate of interest decreases…

Q: Suppose that the reserve requirement is 6.7%. If the Fed buys $5 million in bonds from the First…

A: In the market, commercial banks have ability to create money by making lending transactions. Money…

Q: A) Suppose the Fed conducts an open market purchase by buying $10 million in Treasury bonds from…

A: "Since you have asked  multiple questions,we will solve the first question for you .If you want any…

Q: D7 Suppose that people hold 17 cents out of every dollar of deposits as currency. Suppose that banks…

A: MPC = c = 17/100 = 0.17 Reserve ratio = r = 13/100 = 0.13 Formula of multiplier = (1+c)/(c+r)

Q: 1. Suppose that this year's money supply is $500 billion,nominal GDP is $10 trillion, and real GDP…

A: REAL GDP: Refers to the value of all goods and services produced within a country. here base year…

Q: 4. Assume that money velocity is constant. a. Suppose the money supply increases by 12%. What do you…

A: Money velocity:- V*M = P*Q V = velocity of transactions M = Money supply P = price level Q = index…

Q: 2. Suppose that the government of Australia wants to maintain a constant nominal money supply. Its…

A:

Q: 4. Suppose demand for real money balance is M = 500 + 0.2Y – 1000i . P If P = 10, Y= 1000, and I =…

A: Given; where; P= 10 Y= 1000 i= 0.10 MdP=500+0.2(1000)−1000(0.1) Md=10(500+200−100)Md=6000

Q: Suppose that this year's money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is…

A: "Since you have asked multiple questions, we will answer only first question for you. If you have…

Q: Suppose the Fed decides to purchase $60 billion worth of government securities on the open market d.…

A: d) When Fed decides to purchase the bonds, it implies that in exchange of bonds, the Fed is…

Q: Consider an economy in which banks would like to hold 25% of their deposits as reserves. Initially,…

A: Initial deposits = 7000 Reserve ratio =25% A) Currency with the public = 1000 Bond purchase by the…

Q: Based on the diagram, if potential output equals 5,000 and the real interest rate is 5 percent, then…

A: A recessionary gap is where actual output is less than potential output. An inflationary or…

Q: how do i answer 2.1

A: Demand for money refers to the amount of money that households and firms desire to hold at different…

Q: Assume that the required reserve ratio is 25%. If the Fed buys $5 million worth of      government…

A: Given information: Required reserve ratio (rr): 25% Purchase of government bonds by Fed (change in…

Q: 11. Assume that in an economy the total money supply, Ms, is SR100; the quantity of output, Q, is 50…

A: The formula for finding the income velocity of money is V = (P * Q) / M where, P is the price of…

Q: 3. Suppose that this year’s money supply is $500 billion, nominal GDP is $10 trillion, and real GDP…

A: According to the Quantity Theory Money, Money Supply×Velocity of money=Price level×Real GDP or,…

Q: Consider this frugal governed closed economy with a money market.  Note there are no taxes in this…

A: Investment multiplier (k) = 1/(1-MPC)= 1.43 currently I =  $1,400 Increase in aggregate…

Q: Suppose banks keep no excess reserves and no individuals or firms hold on to cash . If someone…

A: Simple money multiplier = 1/rrr  rrr= required reserves ratio = 0.05 Simple money multiplier =…

Q: Scenario: Monetary Basc and Money Supply Assume that the reserve is 209% and the monetary aggregates…

A: Answer; Option (a) $225 billion is correct