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Economic Accounting

 

  1. Show the changes in balance sheets, state what happens to a) reserves or currency in circulation, b) the monetary base, c) the money supply, and d)interest rates.

 

  1. The Fed buys $1billion worth of securities from banks.
  2. The Fed sells $9 billion worth of securities to banks.
  3. Fed buys $99 million worth of securities from non-bank public and non-bank public holds proceeds in deposit.
  4. Fed sells $81 million worth of securities to the non-bank public and non-bank public paid by check (from deposit).
  5. Fed sells $243 million worth of securities to the nonbank public and nonbank public paid for it in currency.
  6. Fed buys $96 million worth of securities from the nonbank public and the Fed paid for it in currency.
  7. Banks borrow $996 million worth of Discount Loans from the Fed.
  8. Banks payback $27 billion worth of Discount Loans from to the Fed.

 

  1. Assume the required reserve ratio equals 12%. Find the maximum deposit expansion using the deposit multiplier formula.
  2. The Fed bought $81 billion worth of securities from the banking system.
  3. There is a new deposit of $81 billion in the banking system.

 

  1. State what happens to the a) excess reserve to deposit ratio, b) bank loans to the public, and c) the money supply.
  2. market interest rates fall
  3. expected deposit withdrawals rise

 

  1. State what happens to the a) discount loans, b) bank loans to the public, and c) the money supply.
  2. market interest rates rise
  3. the discount rate falls

 

 

  1. State what happens to the a) currency to deposit ratio, b) the money supply.
  2. wealth rises
  3. liquidity of deposits fall.
  4. risk on deposits rise.
  5. trail of information left by deposits fall.

 

  1. State what happens to the money supply.
  2. the ratio of excess reserves to deposit rises
  3. the required reserves to deposit ratio rises
  4. the currency to deposit ratio rises
  5. the monetary base rises.

 

  1. By how much would a) reserves, b) the monetary base change when,

The Fed makes an open market purchase of $30 million?

 

 

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Category: Sample Questions