If the reserve ratio is 20 percent,and banks do not hold excess reserves,and people hold only deposits and not currency,then when the Fed sells $40 million of bonds to the public,bank reserves
A) increase by $40 million and the money supply eventually increases by $200 million.
B) increase by $40 million and the money supply eventually increases by $800 million.
C) decrease by $40 million and the money supply eventually decreases by $200 million.
D) decrease by $40 million and the money supply eventually decreases by $800 million.
Correct Answer:
Verified
Q36: The interest rate that the Fed charges
Q39: The discount rate is
A)the rate at which
Q59: Other things the same,if reserve requirements are
Q84: Which of the following is correct?
A)The Fed
Q137: If the public decides to hold more
Q194: The banking system currently has $200 billion
Q198: The banking system currently has $10 billion
Q201: Suppose that banks decide to hold more
Q313: Other things the same,if the Fed raises
Q315: In a fractional-reserve banking system with no
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents