As a result of the Fed's sale of $3,000 worth of government securities to First Main Street Bank, the bank becomes reserve deficient.Suppose that Nick, a First Main Street Bank's customer, re-pays back the $3,000 loan he took out a few months ago.STEP: 2 of 3Which of the following most accurately describes First Main Street Bank's actions?The bank keeps the $3,000 as reserves.The bank creates a $42,000 loan.The bank keeps the $450 as reserves.The bank creates a $3,000 loan.The money supply in the economy is $

The central bank manages the supply of money in the economy via monetary tools such as adjustments…

As a result of the Fed's sale of $3,000 worth of government securities to First Main Street Bank, the bank becomes reserve deficient. Suppose that Nick, a First Main Street Bank's customer, re-pays back the $3,000 loan he took out a few months ago. Which of the following most accurately describes First Main Street Bank's actions? The bank keeps the $3,000 as reserves. The bank creates a $42,000 loan. The bank keeps the $450 as reserves. The bank creates a $3,000 loan. The money supply in the economy is $

As a result of the Fed's sale of $3,000 worth of government securities to First Main Street Bank, the bank becomes reserve deficient. Suppose that Nick, a First Main Street Bank's customer, re-pays back the $3,000 loan he took out a few months ago. Which of the following most accurately describes First Main Street Bank's actions? The bank keeps the $3,000 as reserves. The bank creates a $42,000 loan. The bank keeps the $450 as reserves. The bank creates a $3,000 loan. The money supply in the economy is $

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter13: Monetary Policy

Section: Chapter Questions

Problem 8E

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