Multiple Choice
Assume that there are no excess reserves in the banking system when the reserve requirement is 20%.The purchase of $10,000 in U.S.government securities by the Fed from Academy National Bank has the potential to ultimately increase the money supply by:
A) $2,000.
B) $8,000.
C) $10,000.
D) $20,000.
E) $50,000.
Correct Answer:
Verified
Correct Answer:
Verified
Q2: Suppose the required reserve ratio is 0.2,and
Q3: A fall in the discount rate will
Q4: Lowering the discount rate:<br>A)encourages banks to borrow
Q5: The banking system creates money in the
Q6: If the Fed purchases government securities in
Q8: Which of the following is the largest
Q9: Banks create money when they make loans.
Q10: When the Fed buys U.S.government securities from
Q11: Suppose you borrow $1,000 to purchase a
Q12: Suppose the reserve requirement is 15 percent.Which