Explain whether each of the following eventsincreases or decreases the money supply.a. The Fed buys bonds in open-market operations.b. The Fed reduces the reserve requirement.c. The Fed increases the interest rate it pays onreserves.d. Citibank repays a loan it had previously takenfrom the Fed.e. After a rash of pickpocketing, people decide tohold less currency.f. Fearful of bank runs, bankers decide to hold moreexcess reserves.g. The FOMC increases its target for the federalfunds rate.
Explain whether each of the following eventsincreases or decreases the money supply.a. The Fed buys bonds in open-market operations.b. The Fed reduces the reserve requirement.c. The Fed increases the interest rate it pays onreserves.d. Citibank repays a loan it had previously takenfrom the Fed.e. After a rash of pickpocketing, people decide tohold less currency.f. Fearful of bank runs, bankers decide to hold moreexcess reserves.g. The FOMC increases its target for the federalfunds rate.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter13: The Federal Reserve System
Section: Chapter Questions
Problem 2WNG
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Question
Explain whether each of the following events
increases or decreases the money supply.
a. The Fed buys bonds in open-market operations.
b. The Fed reduces the reserve requirement.
c. The Fed increases the interest rate it pays on
reserves.
d. Citibank repays a loan it had previously taken
from the Fed.
e. After a rash of pickpocketing, people decide to
hold less currency.
f. Fearful of bank runs, bankers decide to hold more
excess reserves.
g. The FOMC increases its target for the federal
funds rate.
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