As a eh of the given A rise by S100 R remain C rise by 51,000 Dall by S100 of se

Question

As a eh of the given A rise by S100 R remain C rise by 51,000 Dall by S100 of securities fromi As a result of the given transactions, excess reserves in the A. rise by $1,000 B. rise by S100 C. fall by $100 D. remain unchanged 5S. If the Fed were to reduce the legal reserve ratio, we would expect nflation B. lower interest rates, an GDP, and a higher rate of infliatfion C. lower interest rates, an expanded GDP, and a lower rate of inflation D. higher interest rates, a contracted GDP, and a lower rate of inflation 56. Which of the monetary policy tools can alter both the level of A. Open-market operations B. The federal funds rate. C. The reserve ratio. D. The discount rate. 57. The discount rate is the interest: A. rate at which the Federal Reserve Banks lend to commercial banks B. rate at which the central banks lend to the U.S. Treasury C. rate at which commercial banks lend to the public. D. yield on long-term government bonds 58. A commercial bank can add to its actual reserves by A. lending money to bank customers securities from a Federal Reserve Bank B. buying government C. buying government securities from the public. D. borrowing from a Federal Reserve Bank.

Explanation / Answer

55. Lower interest rates, an expanded GDP, and a higher rate of inflation

Legal reserve is minimum amount of money that bank or any financial institutions keep as security.

56. Reserve ratio

The reserve ratio is the portion of depositors' balances banks must have on hand as cash.

57. B. rate at which the Federal Reserve Banks lend to commercial banks.

The discount rate is rate at which the Federal Reserve Banks lend to commercial banks.

58. D. borrowing from a Federal Reserve Bank.

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