can anyone answer and if possible explain why choose the answer. e.g. 1 D becaus
ID: 1110852 • Letter: C
Question
can anyone answer and if possible explain why choose the answer. e.g.
1 D because.........
C) deflation D)GDP 2. When the Central Bank lowers the required reserve ratio, the banks' excess reserves and the money supply A) remain constant; decreases B) decrease; decreases C) increase; remains constant D) increase; increases 3. A decrease in the discount rate will most likely A) decrease the money supply. B) not affect the money supply. C) increase the money supply D) have an unclear effect on the money supply 4. Jacob makes excellent tamales and Amanda is very good at mowing lav ns. Amanda agree to mow Jacob's lawn, if he makes her a dozen ta A) legal tender. B) barter C) commodity money D) fiat money. males. This is an example of 5. Betty won $500 in a poker tournament. She deposits her $500 winnings into a money market fund so that she can use the money next year to help her pay for a trip to Las Vegas. This is an example of money serving as a(n) A) unit of account. B) medium of exchange. C) store of value. D) investment good. 6. If interest rates decrease to a very low level, people will most likely hold A) more money in savings accounts and less cash. B) less money in savings accounts and less cash. C) less money in savings accounts and more cash. D) more money in savings accounts and more cash 7.In a recession: A) Unemployment is likely to be low B) Prices are likely to increase C) Growth is negative D)Growth is slowExplanation / Answer
(2)
The required reserve ratio is the certain percentage of total deposit with the bank, which bank keep in cash which cannot be lent out to people. Therefore if Central banks lower the required reserve, then banks can lend more portion of the total deposit to people. Therefore money supply increases in the economy.
Excess reserve = reserve - required reserve
When required reserve ration decreases, then excess reserve increases.
Hence option d is the correct answer.
(3)
When discount rate decreases, then it is cheaper for the commercial banks to borrow money from the central bank and therefore banks increase their lending activity. Hence It increases money supply in the economy.
therefore option c is the correct answer.
(4)
Since Jacob makes tamales for Amanda in exchange for mowing her lawn by Amanda. So in this activity, both are working for each other but for the exchange of work and not for money. Therefore it is called a barter because goods are exchanged for services.
hence option B is the correct answer.
(5)
Since Betty has won $500 money today and he/she kept it in the money market fund for using in future for a trip to Las Vegas. It means she has stored his/her money.
Hence money is serving here as a store of value.
Hence option c is the correct answer.
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