convibiscms/mod/ibsn lelp J, City University of New York-x aNew tab 1/23/2018 11

Question

convibiscms/mod/ibsn lelp J, City University of New York-x aNew tab 1/23/2018 11:59 PM 6.6/71/21/2018 03:18 PM Print Cakulator uestion 16 ef 22 IncomectIncomect Mapd Sapling Learning There are several ways that governments can increase or decrease the money supply. Match the descriptions below with the corresponding polioy tool. I's possible that a description does not apply to any of the terms Open Market Operations Reserve Requirement Discount Rate Quantitative Easing A centralbank puhsinggovermment An increase in a large quantity of d-lermn freasury tonds printing more curency government speing arrency An increase in the interest A central bank An increase in the rate that a central bank purchasing existing bonds percentage of deposits that charges commercial banks banks must keep on hand. for loans +Previous Give Up & View Solution G Check Answer eNext Hint -HExit

Explanation / Answer

Open market operations:

--A central bank purchasing existing bonds

--An increase in government spending

Reserve Requirements:

--An increase in the percentage of deposits that banks must have keep n mind

Discount Rate:

--An increase in the interest rate that a central bank charges commercial banks for loans

Quantitative Easing:

--A central bank purchasing a larger quantity of longer term Treasury bonds;

Explanation:

----Reserve requirements refers to the portions of deposits that banks are required to hold in cash, either in their vaults or on deposit at a Reserve Bank.

-- Discount rate refers to the interest rate that the Reserve Banks charge commercial banks for short-term loans.

--Open market operations (OMO) refers to the buying and selling of government securities in the open market for the purpose of expansion or contraction of the amount of money in the banking system, facilitated by the Federal Reserve (Fed).

--Quantitative easing is adopted by the government for the money supply increase in the economy to furthr increase spending by consumers and lending by commercial banks.

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