1. In terms of the mechanics of quantitative easing, A. quantitative easing form
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Question
1. In terms of the mechanics of quantitative easing,
A. quantitative easing formally changes interest rates; open-market operations only influence rates.
B. it works the same as open-market operations.
C. it differs from open-market operations in that the securities purchases occur directly from households.
D. it only changes the interest rate; it doesn’t influence bank reserves.
2. Starting in 2014, the European Central Bank (ECB), along with a few other central banks in Europe, implemented a strange monetary policy of
A. closed-market operations.
B. market integration.
C. negative interest rates.
D. qualitative easing.
3. Answer the question on the basis of the given consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is 10 percent. All figures are in billions.
Suppose the Fed wants to increase the money supply by $400 billion to drive down interest rates and stimulate the economy. Assuming that the money multiplier is operating to full effect, to accomplish the desired increase, the Fed could
A. sell $20 billion of U.S. securities to the banks.
B. buy $20 billion of U.S. securities from the banks.
C. sell $40 billion of U.S. securities to the banks.
D. buy $40 billion of U.S. securities from the banks.
4. The collateral used for repos and reverse repos is (are)
A. corporate securities.
B. autos.
C. homes.
D. government bonds.
5. On a diagram where the interest rate and the quantity of money demanded are shown on the vertical and horizontal axes, respectively, the transactions demand for money can be represented by
A. a line parallel to the horizontal axis.
B. a vertical line.
C. a downsloping line or curve from left to right.
D. an upsloping line or curve from left to right.
6. What are two conflicting issues that the European central banks that experimented with negative interest rates found that they eventually had to balance?
A. a desire to increase lending, but a smaller pool of excess reserve
B. reducing unemployment, while also reducing inflation
C. lower level of spending and more savings
D. domestic products versus imported goods
PLEASE ANSWER ALL. PLEASE DO NOT RESPOND IF WONT ANSWER ALL. THANK YOU FOR THE HELP!!
Assets Liabilities & Net Worth Reserves $60 Checkable Deposits $600 Securities 140 Stock Shares 260 Loans 260 Property 400Explanation / Answer
1 Answer (c), quantitative easing means when central bank intervene in bond mkt other than govt securities
2 answer (c) negative interest means people will have to pay money for the privelage of keeping their money in bank
3 answer ( d) money supply= money multiplier* high powered money
4 answer (d) for purchasing through repo or reverse repo collateral is required
5 answer (b)transaction demand for money is unaffected by interest rate
6 answer (c) the aim is to boost demand for increasing output and employment and aggregate demand.
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