« previous next »

Author Question: Suppose a bank repays a 10 million discount loan that it had previously borrowed from the Fed. ... (Read 78 times)

madam-professor

  • Hero Member
  • *****
  • Posts: 584
on: Jun 30, 2018
Suppose a bank repays a 10 million discount loan that it had previously borrowed from the Fed. Illustrate how this affects the balance sheets of the Fed and the banking system.
 
  What will be an ideal response?

Question 2

If households spend 0.40 of each additional dollar of increased income, the expenditure multiplier will be
 
  A) 1.67.
  B) 2.5.
  C) 4.
  D) 6.


kilada

  • Sr. Member
  • ****
  • Posts: 311
Reply #1 on: Jun 30, 2018
Answer to Question 1

The Fed's assets decline by 10 million as discount loans decline and its liabilities decline by 10 million as reserves fall. The banking system's assets decline by 10 million due to a decline in reserves and liabilities decrease by 10 million due to a decline in discount loans.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

madam-professor

  • Hero Member
  • *****
  • Posts: 584
Reply #2 on: Jun 30, 2018
Thank you


kilada

  • Sr. Member
  • ****
  • Posts: 311
Reply #3 on: Jun 30, 2018
No problemo


« previous next »
 

Did you know?

Eating carrots will improve your eyesight. Carrots are high in vitamin A (retinol), which is essential for good vision. It can also be found in milk, cheese, egg yolks, and liver.

Did you know?

According to the American College of Allergy, Asthma & Immunology, more than 50 million Americans have some kind of food allergy. Food allergies affect between 4 and 6% of children, and 4% of adults, according to the CDC. The most common food allergies include shellfish, peanuts, walnuts, fish, eggs, milk, and soy.

Did you know?

The first-known contraceptive was crocodile dung, used in Egypt in 2000 BC. Condoms were also reportedly used, made of animal bladders or intestines.

Did you know?

Increased intake of vitamin D has been shown to reduce fractures up to 25% in older people.

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

President-elect Barack Obama 150 million tiny carbon nanotubes President-elect Barack Obama 150 million tiny carbon nanotubes
The reflection nebula NGC 1999 is brilliantly illuminated by V380 Orionis (center), a variable star The reflection nebula NGC 1999 is brilliantly illuminated by V380 Orionis (center), a variable star
Hong Kong is a strange situation. A British colony since 1842, it was handed back to China in 1997 a Hong Kong is a strange situation. A British colony since 1842, it was handed back to China in 1997 a
A Global Bloom: Cities With Over One Million Residents A Global Bloom: Cities With Over One Million Residents
Number and label designations for oxygen sensors. Bank 1 is the bank where cylinder number 1 is ... Number and label designations for oxygen sensors. Bank 1 is the bank where cylinder number 1 is ...
A mortgage loan of $132,000 at 6% compounded semiannually is to be amortized over 25 years by ... A mortgage loan of $132,000 at 6% compounded semiannually is to be amortized over 25 years by ...
Video: Proteins

For a complete list of videos, visit our video library