EBK MACROECONOMICS
10th Edition
ISBN: 9780134896571
Author: CROUSHORE
Publisher: VST
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Question
Chapter 14, Problem 5RQ
To determine
To know: Ways available with the Federal bank to control money supply and their way of working.
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Why are bank accounts included in our definition of the money supply?
Which of the following is the role of the Federal Reserve System?
Select one:
a. Set the Required Reserve Ratio for Bank of America
b. Manage the account for South Carolina and other state governments
c. Make loans to local businesses
d. Print new money
e. All of these are roles of the Fed
Which of the following instruments is NOT used by the Federal Reserve to change the money supply?
Group of answer choices
the federal tax code
open market operations
the required reserve ratio
the discount rate
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- How does the Federal Reserve control the money supply in the United States?arrow_forwardWhich statement best describes a responsibility of the Federal Reserve System for the United States? It determines monetary policy It negotiates trade agreements It collects corporate taxes It guarantees bank deposits.arrow_forwardThe Central banks' tools to control the money supply include the discount rate, and interest payments on reserves. How should each instrument be changed if the Central bank wishes to decrease the money supply?arrow_forward
- Explain how to use the discount rate to expand the money supply.arrow_forwardThe U.S. Treasury maintains accounts at commercial banks. What would be the consequences for the money supply if the Treasury shifted funds from one of those banks to the Fed?arrow_forwardOver the years, the Federal Reserve Banks have printed many billions of dollars more in currency than U.S. households, businesses, and fifinancial institutions now hold. Where is this “missing” money? Why is it there?arrow_forward
- Which of the following is included in the narrowest definition of the money supply? Currency in circulation. Transactions account balances. Traveler's checks. All of the above.arrow_forwardIs Interest on Reserves Balances (IORB rate) a tool that the federal reserve uses to control the money supply? Just the same as the Federal Reserve uses open market operations, discount rate, reserve requirements?arrow_forwardCurrently, the Fed does not have complete control of the money supply because the Congress and the Treasury can also make changes to the money supply. government bonds may not be available for purchase when the Fed wants to perform OMO. the Fed does not know where all the U.S. currency is located. the amount of money in the real economy depends on the behavior of depositors and bankers. All of the above are correct.arrow_forward
- Is the Federal Reserve an independent institution? If so, why did the U.S. Congress establish the Federal Reserve as an independent agency? Discuss.arrow_forwardWhat is the most effective monetary policy tool that the Federal Reserve uses? a) Open market operations b) Reserve requirements c) Discount rate d) Federal funds ratearrow_forwardThe central bank of a country decides to pursue an expansionary monetary policy. Identify one possible action they could take. Carefully explain, in as much detail as possible, how the chosen action will impact the money market. Illustrate the overall impact of the chosen action on the money market. Thanks for your help.arrow_forward
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