31. The money multiplier is approximated as being equal to a. one divided by the
ID: 1173961 • Letter: 3
Question
31. The money multiplier is approximated as being equal to a. one divided by the reserve ratio b. one divided by the federal funds. c. demand deposits multiplied by the interest rate d. demand deposits multiplied by the reserve ratio 32. If the money multiplier is approximated to be 2, then the reserve ratio must be: a. 50 percent. b. 5 percent. c. 2 percent d. 20 percent. 33. The Federal Reserve: a. is fairly independent of the rest of government. b. works closely with the Treasury department. e. is easily swayed by political pressure d. has become an ineffective policy-making body in the last decade 34. The discount window provides: a. guaranteed emerg ency funds for banks in trouble at a higher interest rate than others. b. loans to banks at low interest rates, so they can lend more money out to the public c. guaranteed emergency funds for banks in trouble at a lower interest rate than others. d. loans to banks at low interest rates, only when the economy is doing wellExplanation / Answer
Answer 31 : Option A is correct. The money multiplier is app approximately equal to the reserve ratio. It is calculated as 1 divided by reserve ratio. Money multiplier tell us about the maximum amount of money supply increase as compared to increase inReserve Requirement.
Answer 32 : option A is correct.
Money multiplier = 2
MM = 1/Reserve ratio
2= 1/Reserve ratio
Reserve ratio = 1/2 = 0.5 or 50%
Answer 33: Option A is correct. Federal reserve is an independent body working effectively for benefit of the country. Federal reserve main purpose is to work effectively for the stable monetary policy.
Answer 34 : option A is correct. The discount window provides eligible banks to borrow money from Central Bank higher than the other. Higher interest rate has been charged so that banks can borrow money in difficulty.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.