14. Which of the following is n a. nickel b a 520 dollars b c a 51,000 balance s

Question

14. Which of the following is n a. nickel b a 520 dollars b c a 51,000 balance ssored in a checking accoun d.A $100 dollars bl 15. MI equals currency plus demand deponits phos a. nothing else. b. other checkitle deposits. c. traveler's checks plus other checkable deposits d, traveler's checks plus oder checkable depoio savings deponits rerve ratio is 5 percent, then $500 of new reserves can pene a. $2,500 of new money in the econoumy "h, $1,000 of new money in the economy c. $25 of new money in the economy d. $10,000 of new monecy in the economy 17. What essential factor enables commercial banks to create money? a. required reserves b. excess reserves c. local government securities d. bonds I8. Open market operations involve opening the discount window buying stocks in the stock market buying anew markets opening new markets for commodities a. b. open market ling government securities in the d. Altematively, the Fed 19. To increase the money supply the Fed can conduct open-market a. increase the discount rate b. stop lending money to banks. c. decrease the discount rate d. not change the discount rate a. the Fed does not control the amount that banks choose to lend b. the Fed cannot provide incentives for banks c. the Fed has only one monetary tool d. none of the Fed's tools are powerful. 20. One reason that the Fed's control of the money supply is not precise is because

Explanation / Answer

14. c) This is a part of money but not currency.

15 C) the savings deposit are not part of M1

16 d) money multiplier = 1/rr =1/0.05 = 20. Total new money = 20*500 = 10,000.

17 c) excess reserves are lent out as loans and thus helps create money.

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