Which of the following will not lead to an increase the money supply? O Increase the discount rate O Open market sale O Decrease the required reserve ratio. O Inject new money into the economy.
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- What happens to the amount of money demanded or supplied in each of the following cases?Draw a separate money demand and money supply graph for each part of this question, label theaxes, and show how the change will shift the money demand and/or the money supply curve.Explain any curve shifts in each case. Show initial and final equilibrium interest rate and quantityof money.a. The Central Bank sells securities in the open market while the economy is experiencinghigh inflation. b. The Central Bank decreases the required reserve ratio during a recession.If reserve requirements are increased, which of the following are true regarding the money multiplier?OA. The money multiplier decreases, and the money supply decreases.OB. The money multiplier increases, and the money supply decreases.Oc.The money multiplier increases, and the money supply increasesOD.The money multiplier decreases, and the money supply increases.(A). For the Fed to reduce the money supply using open market operations it should ... O a. Increase the money supply. O b. Lower the minimum reserve requirement. O c. Buy treasury bills from banks. O d. Sell treasury bills to banks. (b). Which of the following is not a result of expansionary Open Market Operations? O a. Increase in the money supply. O b. Less investment spending. O c. Banks make more loans. O d. Decrease in the federal funds rate.
- Explain why this following statement is true or false? a.) The money supply will increasing if the bank has a reserve ratio of 100% while with a reserve ratio less than 100% and lends the remaining deposits, the money supply is remain unchanged.a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum ncrease in the money supply be what you found it to be in part a)? Why or why not?a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not?c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not?
- The reserve requirement is 10%, and Leroy deposits his $1,000 check received as agraduation gift in his checking account. The bank does NOT want to hold excessreserves.d) What is the maximum expansion in the money supply possible?e) By how much did the monetary base change?Assume that Elike raises $5,000 in cash from a yard sale and deposits the cash in his checkingaccount at the Bank of Uchenna. By how much does the money supply immediately change as aresult of like's deposit?a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent. Explain in details.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? Explain in details. c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not? Explain in details.
- Suppose that the Central Bank has currently set the reserve requirements in the economy to beequal to 10%. Assume that there is no cash drain. Suppose also that in this economy there are$400 in initial deposits and $6,000 of cash.6. Given the above, what is the total Money Supply (MS) in the economy?Assume that Jones deposits $500 in currency into her checkable-deposit account in First National Bank. A halfhour later Smith obtains a loan for $750 at this bank. By how much and in what direction has the money supply changed? Explain.Please choose the correct answers: If everyone in the economy decides to close their bank accounts and hold all their money onhand, this will cause overall M1 to rise / fall / remain unchanged / change ambiguously andoverall M2 to rise / fall / remain unchanged / change ambiguously. Money functions as a medium of exchange because it is readily exchangeable for other goods.A) TrueB) FalseMoney supply rises when banks decide to hold excess reserves over and above what they arelegally required to hold against deposits.A) TrueB) False