6. Suppose the Federal Reserve buys $50 million in Treasury bills from commercia

Question

6. Suppose the Federal Reserve buys $50 million in Treasury bills from commercial banks. If the reserve ratio is 10%, the monetary supply might eventually A) increase; $500 million B) increase; $450 million C) decrease; $450 million D) decrease; $500 million by Use the following to answer question 7: Table: Investment Projects Project Rate of return on investment Cost of investment s 500 18 1,000 14 12 10 2,000 1.500 .200 800 6 7. (Table: Investment Projects) According to the table Investment Projects, if the market interest rate is 11%, the sum of the cost of all projects that investors would choose to fund equal: A) $800. B) $1,000. C) $2,000. D) $4,000. Use the following to answer question 8: Table: Balance of Payment Exports of goods and services$1,425 billion Imports of goods and services Income receipts from abroad Income receipts to foreigners Transfers 1,800 billion 420 billion 400 billion

Explanation / Answer

Q6
Answer
option A
The money supply increase because the buy will give money to banks.
The increase=amount/reserve ratio
=50/.1=500 million

Q7
ANswer
The all project ROR above 11% are chosen and the sum is
=500+300+1000+200+2000
=4000
option D

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