The prime interest rate Multiple Choice is lower than the federal funds rate because it is the rate charged to a bank's most creditworthy customers. is influenced by Fed policies that change the money supply.
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Q: All else being equal, if a central bank buys government bonds from the market it would: a. mean…
A: In finance central bank buying government bonds from the market is known as open market operations.
Q: Which of the following would increase a bank’s Net Interest Margin, assuming all else stays the…
A:
Q: If the U.S. Treasury deposits income tax receipts into its account at the Federal Reserve, then
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Q: Reserve requirements effectively impose a tax on bank deposits that reduce profits. Why does this…
A: The terms "reserve requirement" and "reserve ratio" are sometimes used interchangeably to refer to…
Q: Reserve requirements effectively impose a tax on bank deposits that reduce profits. Why does this…
A: As interest rates rise, banks could earn more money by lending reserves to borrowers. These profits…
Q: Assume that the government sets a binding price ceiling on the interest rate that banks charge on…
A: A price ceiling is a mandate that the price charged on certain goods or products may not rise or…
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Q: Which interest rate is used on very short term loans from one bank to another? A. PRIME INTEREST…
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A: Lets understand the meaning of rate sensitive asset and liabilities. Rate sensitive asset and…
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A: Float in banking system means that money is counted due to time difference between deposit made and…
Q: Which of the following statement is not true about Central bank? a. It ensures stable financial…
A: Central bank is the lender of last resort.
Q: How does fractional-reserve banking influence the money supply in the United States?…
A: Fractional-reserve banking is a banking practice which allows the bank to expand the money supply .…
Q: QUESTION 6 If the banking system has a large amount of excess reserves, which action would the…
A: To control the supply of bank reserves, banks generally use open market operations. for purchasing…
Q: c) In what three ways do commercial banks make a profit from the monetary system?
A: Note: This post has three distinct questions. The first has been answered below.
Q: Which interest rate is used on very short-term loans from one bank to another? A. Prime interest…
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Q: he amount of loans that a bank can create is limited by elect one: O a. laws enacted by Parliament.…
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Q: With open market operations, the federal reserve sets the interest rate it lends to banks. Ture…
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Q: What kind of Interest does a negotiable certificates of deposit issued by large commercial banks…
A: Negotiable certificate of deposits have very high face values and are guaranteed by the banking…
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- If the Fed buys loans from banks, what is the impact on the Loanable Funds Market? A) Decreases the supply of loanable funds and lowers the interest rate. B) Increases the supply of loanable funds and lowers the interest rate. C) Decreases the supply of loanable funds and raises the interest rate. D) Increases the supply of loanable funds and raises the interest rate.Which of the following would increase a bank’s Net Interest Margin, assuming all else stays the same? Choose Two an increase in the interest rate on its loans companies paying off some of their loans and the bank using the funds to purchase Treasury bonds customers switching a portion of their time deposits to demand deposits the bank issues additional equity and keeps the funds in cash an increase in the federal funds rate assuming the bank borrows more in the federal funds market than it lendsAssume that the government sets a binding price ceiling on the interest rate that banks charge on loans.Explain carefully the impact of this policy on the financial market
- All else being equal, if a central bank sells government bonds from the market it would: a. decrease the money supply. b. decrease interest rates. c. mean the supply of loanable funds would move to the right. d. most likely decrease savings in the economy.With open market operations, the federal reserve sets the interest rate it lends to banks. Ture or falseThe discount rate is O the interest rate commercial banks charge each other for overnight loans. the interest rate the Federal Reserve charges member banks for loans from the Fe the interest rate consumers with good credit pay for bank loans. O the interest rate the Federal Reserve charges consumers for short term loans.
- Reserve requirements effectively impose a tax on bank deposits that reduce profits. Why does this tax increase with the interest rate? A. States tend to increase franchise fees on banks as interest rates rise B. Reserve requirements increase as interest rates rise C. Banks earn more money as interest rates increase, so their federal income taxes increase. D. Banks could earn more money if they could lend the funds required to be held as reserves.Reserve requirements effectively impose a tax on bank deposits that reduce profits. Why does this tax increase as interest rates rise? A. As interest rates rise, banks could earn more money by lending reserves to borrowers. These profits are limited by the reserve requirement, and the foregone profits increase as the interest rate rises. B. States tend to increase franchise fees on banks as interest rates rise C. The Fed always increases the reserve requirement as interest rates rise D. Banks earn more money as interest rates increase, so their state and federal income taxes increase.If reserves are scarce, how would the federal funds rate change (increase or decrease) if the Fed:(a) sells mortgage-backed securities(b) decreases the (minimum) reserve requirements(c) conducts overnight repo operations(d) conducts overnight reverse repo operations.
- When any central bank wanted to increase the money supply and loosen credit conditions, what would it do in the private market for government bonds? Explain how this is supposed to affect the economy.In the federal funds markets, financial institutions can borrow money from the Federal Reserve. True False Assuming the STRIPS are held to maturity, their investors know the precise payouts they'll receive. True FalseSay the Fed wants to increase the money supply in the country. Which of the following open market operations would be appropriate to create $12.250 in the banking system if the reserve requirement is 2%? (A) Sell $250 worth of government bonds (B) Sell $12,250 worth of government bonds (C) None of these answers (D)Buy $250 worth of government bonds (E)Buy $12,250 worth of government bonds