The purchase of government securities from the public by the Central Bank will cause: the money supply to increase. demand deposits to decrease. the interest rate to increase. commercial bank reserves to decrease.
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The purchase of government securities from the public by the Central Bank will cause:
-
- the money supply to increase.
- demand deposits to decrease.
- the interest rate to increase.
- commercial bank reserves to decrease.
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Solved in 3 steps
- A system of deposit insurance attracts risk-taking entrepreneurs into the banking industry. increases the likelihood of bank runs. increases the incentives of depositors to monitor the riskiness of their bank's asset portfolio. encourages bank managers to decrease risk.The Federal Reserve was created to: increase employment in the United States. establish a banking system in the United States. provide stability in the banking sector and the economy. correct deflation in the United States.As a "lender of last resort" the Fed :protects the deposits of $100,000 or less in all commercial banks in the country .bails out any depository institution it has decided should not be allowed to fail .bails out any corporation the government has decided should not fail .is obligated to bail out any depository institution in the country that is in financial difficulty
- Commercial banks create money through Group of answer choices facilitating borrowing from the Federal Reserve to the public. reducing risk in the economy. making loans. printing treasury notes.Banks can make loans as long as they have excess government securities. required reserves. deposits. excess reserves. reserves.Member banks of the Federal Reserve Systemn are immune from the effects of monetary policy. advise the Fed on monetary policy. vote on members of the Board of Governors. have little control over the system they "own."
- Money is Group of answer choices the value of all coins and currency in circulation at any time. anything that is generally accepted as a medium of exchange. the same as income. all of the answers.The Bank of Canada sets the reserve requirement, which banks must meet through deposits at the Bank of Canada and cash held at the bank. What do these requirements achieve? Check all that apply. They help to facilitate transfers of funds between banks when a customer from one bank writes a cheque to a customer of another. They help to control the money supply. They help to prevent bank runs by reassuring the public that banks will not make too many loans and run out of cash. They mean that a bank must have one dollar of deposits for every dollar it lends.Money is government bonds and stocks. any assets widely used and accepted as payment. bank deposits. currencies.
- Banking and the Expansion of the Money SupplyMoney is commonly defined as A generally accepted medium of exchange. A U.S. dollar. Paper currency and coinage. Precious metals.The federal funds rate is the interest rate the Fed charges commercial banks. the interest rate a bank charges its best customers. the interest rate banks charge each other for overnight loans. the interest rate on a Treasury Bill.