3 A. 3. The lending ability of commercial banks increases when the Reserve ratio is raised...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
3 A. 3. The lending ability of commercial banks increases when the Reserve ratio is raised Treasury collects tax revenues Fed sells securities in the open market Fed buys securities in the open market If the Fed buys government securities from commercial banks in the open market: The Fed gives the securities to the commercial banks and increases the banks' reserves The Fed gives the securities to the commercial banks decreases the banks' reserves Commercial banks give the securities to the Fed, and the Fed increases the banks' reserves Commercial banks give the securities to the Fed, and the Fed decreases the banks' reserve Assume that there is a 25 percent reserve ratio and that the Federal Reserve buys $4 b th of government securities. If the securities are purchased from the non-bank public, this potential to increase money supply by a maximum of: $16 billion, but only by $14 billion if the securities are purchased directly from comme $14 billion, but by $16 billion if the securities are purchased directly from commercia $16 billion if the securities are purchased directly from comm from commerc 3 A. 3. The lending ability of commercial banks increases when the Reserve ratio is raised Treasury collects tax revenues Fed sells securities in the open market Fed buys securities in the open market If the Fed buys government securities from commercial banks in the open market: The Fed gives the securities to the commercial banks and increases the banks' reserves The Fed gives the securities to the commercial banks decreases the banks' reserves Commercial banks give the securities to the Fed, and the Fed increases the banks' reserves Commercial banks give the securities to the Fed, and the Fed decreases the banks' reserve Assume that there is a 25 percent reserve ratio and that the Federal Reserve buys $4 b th of government securities. If the securities are purchased from the non-bank public, this potential to increase money supply by a maximum of: $16 billion, but only by $14 billion if the securities are purchased directly from comme $14 billion, but by $16 billion if the securities are purchased directly from commercia $16 billion if the securities are purchased directly from comm from commerc
Expert Answer:
Answer rating: 100% (QA)
solution 1 Ans The lending opportunity of commercial banks increases when the d Fed buys secur... View the full answer
Related Book For
Economics
ISBN: 978-0073375694
18th edition
Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn
Posted Date:
Students also viewed these economics questions
-
In carrying out open market operations, the Federal Reserve buys and sells U.S. Treasury securities. Suppose the U.S. government paid off all its debt. Could the Federal Reserve continue to carry out...
-
When the Fed sells government bonds, the nation's money supply decreases. Explain how this works. To illustrate, you can construct your own bank transactions and changes in the assets and liabilities...
-
When the Fed increases money supply to lower the federal funds rate, do you think this will the cost of capital of U.S. companies be reduced? Explain how the segmented markets theory regarding the...
-
Jane Grimes, retail fruit and vegetable merchant, does not keep a full set of accounting records. However, the following information has been produced from the business's records: 1. Summary of the...
-
Federated Electronics, Ltd., manufactures display screens and monitors for computers and televisions, which it sells to companies around the world. It wants to construct a new warehouse and...
-
For each item that follows, identify the foundational principle of accounting that best describes it. a. For its annual reports, Sumsong Corp. divides its economic activities into 12-month periods....
-
Find the critical value f0.01 for F2,5.
-
Diagrams of two self-service gasoline stations, both located on corners, are shown in Figure (a) and (b). Both have two rows of four pumps and a booth at which an attendant receives payment for the...
-
MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury...
-
You just began a position as a financial accountant at Peyton Approved. In this role, your first task is to prepare the companys financials for the year-end audit. Additionally, the company is...
-
= M, Let C be an oriented curve parameterized by r(t), where a t b. Suppose that the following two items are also true: (i) F is always tangent to C in the direction of orientation, and (ii) ||F||...
-
What are the common and unique features of six types of Gen IV reactors?
-
Name the three principle actors who determine the money supply.
-
What are the features that foster to innovate over Gen \(\mathrm{III} / \mathrm{III}^{+}\)reactors and what new goals are specified for Gen IV reactors?
-
Major change in the design of light and heavy water reactors to achieve design characteristics of SMRs.
-
What are the reactor physics requirements for sustainability of TWRs?
-
Under current U.S. GAAP, the transferor of receivables to a securitization entity (SE) that it has formed should treat the transfer as a collateralized borrowing instead of a sale if the transferor...
-
a) Show that (a, b) := {{a}, {b}} does not satisfy the ordered pair axiom. b) Determine whether each of the following statements is true or false. (Give a reason in each case): (i) {a, b} C (a, b)....
-
What is the multiplier effect? What relationship does the MPC bear to the size of the multiplier? The MPS? What will the multiplier be when the MPS is 0, .4, .6, and 1? What will it be when the MPC...
-
Do you agree with each of the following statements? Explain why or why not. a. The problem with U.S. agriculture is that there are too many farmers. That is not the fault of farmers but the fault of...
-
Why is saving called a leakage? Why is planned investment called an injection? Why must saving equal planned investment at equilibrium GDP in the private closed economy? Are unplanned changes in...
-
In a PPS sample with a sampling interval of \($10,000,\) an auditor discovered that a selected account receivable with a recorded amount of \($5,000\) had an audit amount of \($3,000.\) The projected...
-
In a PPS sample with a sampling interval of \(\$ 5,000\), an auditor discovered that a selected account receivable with a recorded amount of \(\$ 9,000\) had an audit amount of \(\$ 8,000\). If this...
-
In each of the following cases involving non statistical sampling, indicate what conclusions the auditor might draw and why. a. The likely misstatement is more than the tolerable misstatement. b. The...
Study smarter with the SolutionInn App