There are several ways that governments can increase or decrease the money supply. Match the descriptions with thecorresponding policy tool. It's possible that a description does not apply to any of the policy tools.Open market operationsReserve requirementDiscount rateQuantitative easingAnswer Banka central bank purchasing existing bond:sa government printing more currencya central bank purchasing a large quantity of longer-term Treasury bondsan increase in the percentage of deposits that banks must keep on handan increase in the interest rate that a central bank charges commercial banks for loansan increase in government spending

Question
Asked Mar 15, 2019
930 views
There are several ways that governments can increase or decrease the money supply. Match the descriptions with the
corresponding policy tool. It's possible that a description does not apply to any of the policy tools.
Open market operations
Reserve requirement
Discount rate
Quantitative easing
Answer Bank
a central bank purchasing existing bond:s
a government printing more currency
a central bank purchasing a large quantity of longer-term Treasury bonds
an increase in the percentage of deposits that banks must keep on hand
an increase in the interest rate that a central bank charges commercial banks for loans
an increase in government spending
help_outline

Image Transcriptionclose

There are several ways that governments can increase or decrease the money supply. Match the descriptions with the corresponding policy tool. It's possible that a description does not apply to any of the policy tools. Open market operations Reserve requirement Discount rate Quantitative easing Answer Bank a central bank purchasing existing bond:s a government printing more currency a central bank purchasing a large quantity of longer-term Treasury bonds an increase in the percentage of deposits that banks must keep on hand an increase in the interest rate that a central bank charges commercial banks for loans an increase in government spending

fullscreen
check_circle

Expert Answer

Step 1

Money supply is the stock of money in circulation in an economy in a given time period.

Open market operations are the central bank’s tool through which it influences money supply in the economy. Open market operations include buying and selling of government securities. If the central bank buys government securities, it releases money into the economy and hence expands the supply of money. Similarly, if the central bank buys government securities, it draws money from the economy and hence contracts the money supply.

Reserve Requirements are the statutory requirements by the central bank that commercial banks must hold certain minimum percentage of the deposits as reserve. For example, Cash reserve requirements, statutory liquidity requirements, etc.

Discount rate is the rate of interest at which the central bank extends loans to commercial banks.

Quantitative easing is the phenomenon where the central bank expands money supply using the tools of monetary policy.

Step 2

We categorize the given options under th...

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Monetary Policy

Related Economics Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: Import-substitution and export orientation: arguments pro

A: Import substitution refers to substituting imported goods with home production.Export orientation im...

question_answer

Q: 1. Marty's Frozen Yogurt is a small shop that sells cups of frozen yogurt in a university town. Mart...

A: a.Fixed input:Fixed input refers the quantity do not change as quantity of output changes, which is ...

question_answer

Q: Part I and Part II are independent. Please answer both parts. Part I: During a year of operation, a ...

A: Accounting cost: The accounting cost is the total explicit cost of the firm. Explicit cost mean, the...

question_answer

Q: please help

A: Let assume that the cost of capital is r and cost of labor (wages) is wTo obtain maximization condit...

question_answer

Q: Samantha Roberts has a job as a pharmacist earning $30,000 per year, and she is deciding whether to ...

A: (a)The business and economic profit:Business profit and economic profit can be calculated as follows...

question_answer

Q: Let’s apply the general equilibrium set up to discuss the on-going trade war between the U.S. and Ch...

A: General equilibrium (GE) theory mainly focuses on determining the behavior of demand (D), supply (S)...

question_answer

Q: Additional questions:The labor cost per day of hiring two workers is $_____?The total cost per day w...

A: Fixed costs are the costs that do not vary with the level of output. Rent, interest payments, etc. a...

question_answer

Q: 19) when total utility, U(X) is maximized, marginal utility, MUx is  a)constant b)rising c)maximized...

A: Total utility and marginal utility:When a consumer goes on to consume the units of good continuously...

question_answer

Q: Suppose that a worker in Caninia can produce either 2 blankets or 8 meals per day, and a worker in F...

A: To understand the decline in output, let us understand the backdrop of the situation before the war....