5. With a required 20% reserve ratio, a single bank, which receives cash deposit
ID: 1196903 • Letter: 5
Question
5. With a required 20% reserve ratio, a single bank, which receives cash deposits of $1,000, is available to lend out money up to: 7. The power of the banking system to create the money supply is considerably restricted, if: 8. The interest rate represents : 9. When we speak of expressing the prices of goods in an economy, we are speaking of money’s function as: 10. Bank money is primarily provided by: 11. The simple deposit multiplier assumes that: 12. The Federal Reserve System’s Board of Governors: 13. When the Fed purchases securities in an open market operation, the Fed will: 14. Raising the interest rate tends to: 15. Which of the following is correct sequence? Where M = Money Supply; i = interest rate; I = investment 16. The three basic instruments of monetary policy are:
Explanation / Answer
5. $ 800
7. When Fedral Bank raises the reserve ratio.
8. Rate at which money is lent.
9. Purchasing Power
10. Federal Bank
11. banks always keep any excess reserves rather than lend them out
12. is commonly known as the Federal Reserve Board, is the main governing body of the Federal Reserve System
13. It is increasing the money supply in the market.
14. Increase in cost of borrowings both of organizations and individuals.
15. Investment, Money Supply, Interest Rate
16. open market operations, the discount rate and reserve requirements
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