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Author Question: The money supply has increased from $1.4 trillion to $1.45 trillion. Which of the following could ... (Read 107 times)

oliviahorn72

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on: Apr 19, 2019

Question 1

Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 10%. If the Fed buys $10 million worth of government securities from the public, the change in the money supply will be


◦ $1 million.
◦ $10 million.
◦ $100 million.
◦ $110 million.

Question 2

The money supply has increased from $1.4 trillion to $1.45 trillion. Which of the following could have caused this increase?


◦ The Fed sold government securities to the public.
◦ Consumers who were holding money outside the banking system deposit this money.
◦ The Fed increased the discount rate.
◦ Commercial banks began to hold excess reserves.
Principles of Economics ¦ Case, Fair, Oster ¦ 12th Edition
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Marked as best answer by oliviahorn72 on Apr 19, 2019

flexer1n1

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Reply #1 on: Apr 19, 2019
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oliviahorn72

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Reply #2 on: Apr 19, 2019
Excellent


flexer1n1

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Reply #3 on: Apr 19, 2019
Great! Please up vote :D


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