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Author Question: The Federal Reserve System (The Fed) is the ________ incarnation of a central bank in the United ... (Read 113 times)

james9437

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on: Jun 30, 2018
The Federal Reserve System (The Fed) is the ________ incarnation of a central bank in the United States.
 
  A) first
  B) second
  C) third
  D) fourth

Question 2

Suppose the required reserve ratio is 8 and that banks hold no excess reserves and the public does not change its currency holdings. If the Fed sells 5 million worth of securities, what happens to the amount of deposits in the banking system?
 
  What will be an ideal response?


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succesfull

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Reply #1 on: Jun 30, 2018
Answer to Question 1

C

Answer to Question 2

The simple deposit multiplier is 1/0.08 = 12.5. The amount of deposits changes by 5 million  12.5 = -62.5 million.


james9437

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Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

bitingbit

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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