31. Which of the following both increase the money supply? an increase in the di

Question

31. Which of the following both increase the money supply?     
      an increase in the discount rate and an increase in the interest rate on reserves
       an increase in the discount rate and a decrease in the interest rate on reserves
       a decrease in the discount rate and an increase in the interest rate on reserves
       a decrease in the discount rate and a decrease in the interest rate on reserves

Asset              

Amount in $Billions

Small time deposits

780

Large time deposits

1,700

Demand deposits

450

Other checkable deposits

370

Savings deposits

4950

Traveler's checks

5

Money market mutual funds

740

Currency

880

Miscellaneous categories of M2

50

Rupert

has machete

wants fishing spear

Amber

has cooking pot

wants fishing spear

Rob

has fishing spear

wants machete

Tom

has cooking pot

wants machete

       all wealth.
       all assets, including real assets and financial assets.
       all financial assets, but not real assets.
       those types of wealth that are regularly accepted by sellers in exchange for goods and services.

Question 32. 32. In the U.S., the average adult holds about $3,700 in        currency.
       wealth.
       M1.
       M2.

Explanation / Answer

Question 31:

Answer: A decrease in the discount rate and an increase in the interest rate on reserves ;both increase the money supply. Option 4 is correct.

Question 32:

Answer :  In the U.S., the average adult holds about $3,700 in M1. Option 3 is correct.

Question 33:

Answer: The measure of the money stock called M1 includes wealth held by people in their checking accounts.Option1 is correct.

Question 34:

Answer: When the Fed decreases the discount rate, banks will  borrow more from the Fed and lend more to the public. The money supply increases. Option1 is correct.

Question 35:

Answer: Reserve requirements are regulations concerning the amount of reserves banks must hold against deposits. Option 2 is correct.

Question 36:

Answer: When we say that trade is roundabout we mean that  currency is accepted primarily to make further trades.Option 3 is correct.

Question 37:

Answer: Value of M1 is 1,705 billion dollars. which includes demand deposits, other checkable accounts,travelers check and currency. Option 1 is correct.

Question 38.

Answer: In 1991, the Federal Reserve lowered the reserve requirement from 12 percent to 10 percent. Other things the same this should have increased both the money multiplier and the money supply. Option 1 is correct.

Question 39.

Answer:   Rupert with Rob is the correct option. Option 3 is right answer.

Question 40.

Answer: Economists use the term “money” to refer to those types of wealth that are regularly accepted by sellers in exchange for goods and services. option 4

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