If the Fed engages in an open-market purchase of bonds and simultaneously raises the reserve requirement ratio for commercial banks, what can we conclude about the money supply? The money supply will definitely increase The money supply will definitely decrease The money supply will remain unchanged We cannot be certain what will happen to money supply without further details

We cannot be certain what will happen to money supply without further details

To decrease the money supply, the Federal Reserve can take which of the following actions? Decrease the reserve requirement Sell government bonds or increase the reserve ratio Buy government bonds or decrease the reserve ratio Lower the discount rate

Sell government bonds or increase the reserve ratio

Which of the following best illustrates the 'store of value' function of money? You use money to buy groceries You exchange money for foreign currency You hold currency in a piggy bank that you don't intend to spend right away but at a future date You use a credit card for purchases

You hold currency in a piggy bank that you don't intend to spend right away but at a future date

If the economy were encountering a recession, which of the following monetary policies would be appropriate? Selling government securities, increasing the reserve ratio, increasing the discount rate Maintaining current monetary policies Increasing taxes Buying government securities, reducing the reserve ratio, reducing the discount rate

Buying government securities, reducing the reserve ratio, reducing the discount rate

Monetary Policy and Banking System Functions: Federal Reserve Actions and Money Supply

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Economics - Macroeconomics

andrsonztdc Created by 10 mon ago

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Suppose Joe moves his $1,000 demand deposit from Bank A to Bank B. If the reserve requirement is 10 percent, what is the potential change in demand deposits as a result of Joe's action?

If the Fed engages in an open-market purchase of bonds and simultaneously raises the reserve requirement ratio for commercial banks, what can we conclude about the money supply?

Suppose that in a country people gain more confidence in the banking system and hold relatively less currency and more deposits. As a result, bank reserves will _____ and the money supply will eventually increase.

To decrease the money supply, the Federal Reserve can take which of the following actions?

Which of the following best illustrates the 'store of value' function of money?

If the economy were encountering a recession, which of the following monetary policies would be appropriate?

Suppose the Fed purchases a $1,000 government bond from you. If you deposit the entire $1,000 in your bank, what is the total potential change in the money supply in the banking system as a whole resulting from the Fed's action if reserve requirements are 20 percent?

The long-run aggregate supply curve shifts right if which of the following occurs?

When the pandemic hit the US economy in 2020, the aggregate demand (AD) curve shifted to the left due to which of the following reasons?

The model of aggregate demand and aggregate supply explains the relationship between which two economic factors?

As the price level falls, aggregate spending rises partly due to an increase in consumption spending. This phenomenon is referred to as which of the following?

Which of the following actions would shift aggregate demand to the left?

A short-run aggregate supply curve shows fixed _____, and a long-run supply curve shows fixed _____

Assume the marginal propensity to consume (MPC) is 0.80. A decrease in government purchases of $90 billion will likely shift aggregate demand to the _____ by $450 billion.

Countercyclical policy calls for which of the following actions during economic fluctuations?

Regarding President Biden's $1.9 trillion aid package under the American Rescue Plan Act of 2021, which of the following statements is true?

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