Banks are able to create money only when ( )
A: the reserve ratio is 100%.
B: the Fed sells U.S. government bonds.
C: interest rates are above 2%.
D: only a fraction of deposits are held in reserve.
A: the reserve ratio is 100%.
B: the Fed sells U.S. government bonds.
C: interest rates are above 2%.
D: only a fraction of deposits are held in reserve.
举一反三
- The money supply increases when the Fed A: buys bonds. The increase will be larger the smaller the reserve ratio is. B: buys bonds. The increase will be larger the larger the reserve ratio is. C: sells bonds. The increase will be larger the smaller the reserve ratio is. D: sells bonds. The increase will be larger the larger the reserve ratio is.
- If the reserve ratio is 10% and the Fed sells 10 million worth of bonds to a commercial bank, its deposits A: Increase by 10 million B: Decrease by 10 million C: Increase by 100 million D: Decrease by 100 million
- Which of the following actions by the Fed would reduce the money supply? A: an open-market purchase of government bonds B: a reduction in banks’ reserve requirements C: an increase in the interest rate paid on reserves D: a decrease in the discount rate on Fed lending
- To increase the money supply, the Fed could() A: sell<br/>government bonds. B: decrease<br/>the discount rate. C: increase<br/>the reserve requirement. D: None<br/>of the above is correct.
- Which of the following are true statements about participants in the money markets? A: Large banks participate in the money markets by selling large negotiable CDs. B: The U.S. government and corporations borrow in the money markets because cash inflows and outflows are rarely synchronized. C: The Federal Reserve is the single most influential participant in the U.S. money market. D: All of the above are true. E: Only (a) and (b) of the above are true.