If the Federal Reserve increases the discount rate from 12 percent to 14 percent banks will borrow Multiple Choice more reserves from the Fed and lending will decrease. fewer reserves from the Fed and lending will decrease. more reserves from the Fed and lending will increase. fewer reserves from the Fed and lending will increase

If the Federal Reserve increases the discount rate from 12 percent to 14 percent banks will borrow Multiple Choice more reserves from the Fed and lending will decrease. fewer reserves from the Fed and lending will decrease. more reserves from the Fed and lending will increase. fewer reserves from the Fed and lending will increase

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter19: Money Creation

Section: Chapter Questions

Problem 19SQ

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If the Federal Reserve increases the discount rate from 14 percent to 16 percent banks will borrow Multiple Choice fewer reserves from the Fed and lending will increase. fewer reserves from the Fed and lending will decrease. more reserves from the Fed and lending will increase. more reserves from the Fed and lending will decrease.
When you open a checking account at Bank of America, Bank of America has more reserves and more excess reserves. has more reserves, but excess reserves remain unchanged. has more deposits and less in excess reserves. has more deposits, but excess reserves remain unchanged.
Distinguish between legally required reserves and excess reserves.
How to figure out the banks' excess reserves.
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Question 26 A commercial bank has excess reserves of $10,000 and a required reserve ratio of 20%. It grants a loan of $8,000 to a customer, who then writes out a check for $8,000 that is deposited in another bank. The first bak will find its reserves decrease by: $3,000 $2,000 $1,600 $8,000 Next Page Page 26 of 35
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Required reserves with a bank equal A) Total reserves plus excess reserves B) Excess reserves minus demand deposits C) Total reserves minues excess reserves D) Demand deposits plus savings account
When the Reserve Bank sells government securities, the banks' Group of answer choices reserve requirements will increase and lending will contract, causing a decrease in the money supply. reserves will decrease and lending will contract, causing a decrease in the money supply. reserves will increase and lending will expand, causing an increase in the money supply. reserves/deposit ratio will increase and lending will expand, causing an increase in the money supply. reserves will increase and lending will contract, causing no change in the money supply.