« previous next »

Author Question: Suppose a bank repays a 10 million discount loan that it had previously borrowed from the Fed. ... (Read 73 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?

Fungal nail infections account for up to 30% of all skin infections. They affect 5% of the general population—mostly people over the age of 70.

Did you know?

The toxic levels for lithium carbonate are close to the therapeutic levels. Signs of toxicity include fine hand tremor, polyuria, mild thirst, nausea, general discomfort, diarrhea, vomiting, drowsiness, muscular weakness, lack of coordination, ataxia, giddiness, tinnitus, and blurred vision.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

Did you know?

Between 1999 and 2012, American adults with high total cholesterol decreased from 18.3% to 12.9%

Did you know?

Illicit drug use costs the United States approximately $181 billion every year.

A mound of buffalo skulls. In 1870 an estimated 30 million buffalo roamed the plains; by 1900 there A mound of buffalo skulls. In 1870 an estimated 30 million buffalo roamed the plains; by 1900 there
Shifts between Warm and Cold Periods during the Last 3 Million Years Shifts between Warm and Cold Periods during the Last 3 Million Years
Example of Reconciling a Bank Statement Example of Reconciling a Bank Statement
Example of Reconciling a Bank Statement Cont. Example of Reconciling a Bank Statement Cont.
Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ... Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ...
Calculate the amount of interest that will be charged on $9000.00 borrowed for four months at ... Calculate the amount of interest that will be charged on $9000.00 borrowed for four months at ...
Video: Negative Feedback Regulation of Blood Pressure

For a complete list of videos, visit our video library