please answer question number 5 and 6 Decisions about monetary policy are made b

Question

please answer question number 5 and 6

Decisions about monetary policy are made by: the president and congress. the president's Council of Economic Advisers. the Federal Open Market Committee. representatives of banks that are members of the Federal Reserve System. Which of the following is a function of the Federal Reserve System? I. conducting monetary policy II. examining and supervising commercial banks in the Fed regions III. providing liquidity to Financial institutions I only II only III only I, II, and III Suppose the reserve ratio is 20%. If Sam deposits $500 in his checking account, his bank can increase loans by: $500. $2,500. $100. $400. The Federal Reserve's main assets are: currency in circulation and bank reserves. the facilities of the 12 district banks.

Explanation / Answer

5. I , II , III

6. $2,500

As Increase in Loan = Multiplier*deposits

Multiplier = 1/required reserve = 1/0.20 = 5

so, Increase in Loans = 5*$500 = $2,500

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