If the Fed shifts to a more restrictive monetary policy, and it utilizes the open market operations tool, describe what will happen to each of the following: 1. the reserves available to banks 2. real interest rates 3. household spending on consumer durables

Q: People hold $200 million of bank deposits but no currency. Banks have made $180 million dollars of…

A: Bank holds or bank reserves are named either required stores or overabundance saves. The expected…

Q: What is the federal funds rate?   What problems does the FED encounter when trying to control the…

A: In the United States, Fed makes monetary policy and influence the monetary system by making changes…

Q: A decrease in Treasury securities held by the Fed leads to an increase in the money supply. (True…

A: The Fed (i.e., Central bank of Unites States) controls the money supply in the US by open market…

Q: Which of these statements is true? Select all correct answers. Relative to February 2021, the…

A: The correct answers are - The federal reserve buys and sells assets such as U S treasury bonds in…

Q: If the federal funds rate were above the level the Federal Reserve had targeted, the Fed could move…

A: The federal funds interest rate is the amount that banks charge other banks for overnight loans of…

Q: One thing all expansionary monetary policies have in common is that they all include increasing…

A: Expansionary monetary policy means using monetary policy tools in such a manner that it increases…

Q: During the financial crisis in 2008, commercial banks in the US drastically increased their demand…

A: Starting with certain risky decisions by banks and also the failure of the Lehman brothers,…

Q: Our economy this currently in a deep recession. What actions by the fed would stimulate the economy?…

A: We will consider each of the options separately and try to analyse what would be the effect on the…

Q: If reserves are superabundant, how would the federal funds rate change (increase or decrease) if the…

A: The federal reserve (FR) have the ability to fluctuate the FR fund rate by changing the amount of…

Q: If the Fed wants to increase the money supply, it can a)raise income tax rates b) buy bonds in…

A: Money supply- It is the total stock of money circulated in an economy.

Q: How is it that this expansionary monetary policy could actually lead to an increase in savings?…

A: The answer is as follows:,-

Q: Which of the following is not one of the three tools used by the fed to implement US monetary…

A: Printing more money is not one of the three tools used by the fed to implement US monetary policies.

Q: Using the supply and demand analysis of the market for reserves, indicate how the following…

A: Meaning of Demand and Supply: The term demand refers to the willingness of an individual to…

Q: The Central banks' tools to control the money supply include the discount rate, and interest…

A: If the money supply has to be decreased Central bank would increase discount or interest rate as…

Q: Part II: The Federal Reserve notices this slowdown in the economy and decides to take steps to…

A: Federal Reserve- It is the central bank of the United States of America established in 1993 by the…

Q: If reserves are superabundant, how would the federal funds rate change (increase or decrease) if the…

A: Federal funds rate:- Rates at which commercial banks can lend and borrows excess funds to each other…

Q: The Fed uses open market operations to :Select one .a. determine the required reserve ratio .b.…

A: The Fed uses open market operation to turn up the target rate and its use to sell or buy the…

Q: If the Fed wants to decrease the money supply, it can Multiple Choice sell government bonds.…

A: The following problem has been answered as follows:

Q: Which of the following is not a function of the Fed? 1) Setting reserve requirements for banks. 2)…

A: * ANSWER :-  * The OPTION 2  ( advising Congress on fiscal policy) is correct answer.

Q: Carefully explain how the Federal Reserve (Fed) will use each of the three monetary policy tools at…

A: The monetary authority of a country's policy is to manage either the interest rate charged on very…

Q: Which of the following is NOT a method by which the Fed increases the money supply?   a)…

A: In the United States, Federal Reserve can implement monetary policy to make changes in the money…

Q: When the Fed increased the monetary base between 2008 and 2014, which component of the monetary base…

A: The three components of the monetary base are vault cash, Fed reserve deposit and currency in…

Q: The Federal Open Market Committee can buy and sell government securities/bonds. Which of the…

A: The central bank of the country is the apex bank of the country which is authorized to implement the…

Q: Which of the following is NOT a function of the Fed? OPTIONS: Regulating the money supply Holding…

A: Federal Reserve is the central bank of United States of America. It is responsible for monetary…

Q: From 2020 to 2021, the Bank of Canada started the Corporate Bond Purchase Program, an attempt to…

A: The entire amount of money owned by the public at a given period in time in an economy is referred…

Q: The Central bank ensures the adequacy of money supply in the financial system by printing and…

A: The Central bank ensures the adequacy of money supply in the financial system by printing and…

Q: Describe the Federal Reserve's monetary policy instruments and how they are used.

A: Various monetary policy instruments of Fed are 1. Required reserve ratio 2. Discount rate 3. Open…

Q: If the Fed shifts to a more restrictive monetary policy, and it utilizes the open market operations…

A: Contractionary monetary policy is done in order to reduce the aggregate demand, decrease output, and…

Q: Ordinarily, banks try to keep excess reserves as low as possible because the Fed requires them to do…

A: Excess reserve is the amount of capital reserve held by the bank in excess of what is required by…

Q: Outline to the policy choices for contractionary and expansionary   options of the Fed.

A: Dear student see the answer. I hope it solves your query.

Q: pick one of the four tools the Fed uses to conduct monetary policy and discuss how it causes a…

A: In an economy, any of the monetary tools can be used to influence the behavior of market…

Q: Which of the following does the Fed use most frequently to conduct monetary policy after the…

A: The objectives of the money-related policy are to advance the greatest business, stable costs and…

Q: Which is NOT needed for the Fed to design and implement effective monetary policy to reduce the…

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

Q: 34) Which of the following describes what the Fed would do to pursue an expansionary monetary…

A: An expansionary monetary policy is one where the central bank increases money supply in order to…

Q: The fed controls reserve requirements. True or false

A: The Federal Reserve Bank or the Fed is the central bank of the United States of America. It is an…

Q: The Bank of Canada wishes to reduce the money supply, implementing a tight monetary policy. Which of…

A: Monetary policy is a set of tools used by a country's central bank to encourage long-term economic…

Q: At the start of the 2008/2009 financial crisis, the Fed_____ in an attempt to pump reserves into the…

A: Fed reaction against 2008/2009 financial crisis:- Radical change in monetary base :- by reducing…

Q: The main purpose of expansionary monetary policy is to Select one a reduce interest rates and…

A: Changes in the money supply or in the short-term interest rates constitute monetary policy.