Suppose that Treasury deposits with the Fed are predicted to fall. If the Fed wa

Question

Suppose that Treasury deposits with the Fed are predicted to fall. If the Fed wants to keep the monetary base from changing it will have to conduct_to offset the expected_in monetary base. a defensive open market purchase, increase a defensive open market sale, increase a defensive open market purchase, decrease a defensive open market sale, decrease Define: B= monetary base; RDF = Reserve Deposits held at Fed; VC = Vault Cash; CHP = Currency in the Hands of the nonbank public; DL = discount loans TD = Treasury Deposits; Other Assets (OA) = BP + MISCA + FA FA = Foreign Asset holdings BP = Bank Premises MISCA = Mise assets Float (FLOAT) = CIPC - DACI FOD = FD + OD FD = Foreign Deposits OD = other deposits GOLDSDR = GOLD + SDR TCO = Treasury Currency Outstanding TCH = Treasury Cash Holdings BASE = GOLDSDR + DL + GS + FLOAT + OA + TCO - TD - FOD - OLCA - TCH BASE = FRN + TCO - TCH - COIN + RDF Which of the following expressions is correct? B = RDF + VC + CHP R = Base + CHP B = RDF + CHP B = RDF + Float The term "currency in circulation" refers to: Currency in the hands of the public (CHP) + Reserve Deposits at the Fed (RDF) Currency in the hands of the public (CHP) + Vault Cash (VC) Vault Cash (VC) + Treasry Deposits (TD) Vault Cash (VC) + Float Regarding the uses of the monetary base, the greatest portion consists of: currency in circulation currency held in banks bank deposits at the Fed the Federal Reserve portfolio of securities

Explanation / Answer

D

A

B

C

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