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the Federal Reserve buys s50 million in Treasury bills from commercial banik. bi

ID: 1128082 • Letter: T

Question

the Federal Reserve buys s50 million in Treasury bills from commercial banik. bills from commercial banks 6. Suppose rte reserve ratio is 10%, the monetary supply might eventually. A) increase; $500 million B) increase; $450 million C) decrease; $450 million D) decrease; $500 million by- Use the following to answer question 7: Table: Investment Projects Project Rate of return on investment Cost of invest ment 18 16 14 12 10 $ 500 300 1,000 200 2,000 1.500 1,200 800 (Table: Investment Projects) According to the table Investment Projects, if the market interest rate is 1 fund equal: A) $800. B) $1,000. 7· %, the sum of the cost of all projects that investors would choose to C) $2,000. D) $4,000. Use the following to answer question 8: Table: Balance of Payment Exports of goods and services Imports of goods and services Income receipts from abroad Income receipts to foreigners S1,425 billion 1,800 billion 420 billion 400 billiorn Transfers

Explanation / Answer

Q6
Answer
option A
The money supply increase because the buy will give money to banks.
The increase=amount/reserve ratio
=50/.1=500 million

Q7
ANswer
The all project ROR above 11% are chosen and the sum is
=500+300+1000+200+2000
=4000
option D