Macro Ch 7 HW - Chapter 7 homework Q and A PDF

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Chapter 7 homework Q and A...

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Economics Macro Ch 7. HW Scenario: Assets and Liabilities of the Banking System. Refer to Scenario: Assets and Liabilities of the Banking System. If the reserve ratio is 5% and the banking system does NOT want to hold excess reserves, how much more can be added to the money supply? $1 million Suppose the required reserve ratio is 10% and a depositor withdraws $500 from her checkable deposit. The money supply will _____ if the banking system does NOT hold any excess reserves. decrease by $4,500 Scenario: Money Supply Changes II Charlotte withdraws $8,000 from her checkable bank deposit to pay tuition this semester. Assume that the reserve requirement is 20% and that banks do not hold excess reserves. As a result of the withdrawal, required reserves: decrease by $1,600 If the Federal Reserve increases the discount rate: the money supply is likely to decrease. Normally the discount rate is _____ the federal funds rate above The eurozone is the countries that use the euro as their common currency. If the Federal Reserve wants to discourage banks from borrowing directly from the Federal Reserve and thus decrease the monetary base, it will likely increase the discount rate If the Federal Reserve conducts a $10 million open-market sale and the reserve requirement is 20%, the maximum change in the money supply is: a decrease of $50 million Suppose that the Federal Reserve sells $500 in U.S. Treasury bills, and as a result the money supply falls by $5,000. The reserve ratio can be as low as: 0.1 If the Federal Reserve wanted to increase the money supply, it could _____ the required reserve ratio, _____, and _____ bonds on the open market. decrease; decrease the discount rate; buy...