Suppose the Fed buys a $100,000 worth of U.S. Treasury bonds from the XYZ Pensio

Question

Suppose the Fed buys a $100,000 worth of U.S. Treasury bonds from the XYZ Pension Fund, a member of the public. It pays XYZ with a check. The check is deposited to XYZ’s checking account at a commercical bank. This money

Question 8 options:

raises the reserves at The Fed

has been removed from circulation and has lowered M1.

raises reserves at the commercial bank, and now the bank will be able to make more loans.

The federal funds (Fed funds) rate is the interest rate

Question 1 options:

banks charge their loan customers.

banks pay on certificates of deposit.

banks charge other banks when they loan excess reserves to each other.

the Fed pays on reserves held by banks.

raises the reserves at The Fed

has been removed from circulation and has lowered M1.

raises reserves at the commercial bank, and now the bank will be able to make more loans.

The federal funds (Fed funds) rate is the interest rate

Question 1 options:

banks charge their loan customers.

banks pay on certificates of deposit.

banks charge other banks when they loan excess reserves to each other.

the Fed pays on reserves held by banks.

Explanation / Answer

1. Answer- Raises reserves at the commercial bank, and now the bank will be able to make more loans

We know that the checking deposit means that a transactional deposit account held at a finnacial institution that allows withdrawels and deposits.

2. Answer- Banks charge other banks when they loan excess reserves to each other

We know that the federal fund rate means that the interest rate when the depository institutions lend reserve balance to other depository institutions overnight.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.