When a bank borrows from the Federal Reserve the bank
A) receives a new deposit of legal reserves at the Federal Reserve.
B) creates a new checkable deposit payable to the Federal Reserve.
C) normally will do so because it has excess reserves.
D) loses reserves equal to the amount of the loan.
A
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Answer the following statement(s) true (T) or false (F)
1. When faced with a rent increase, the firm's best policy is to use a small price increase to compensate for some, but not all, of the loss. 2. A change in a variable cost causes a parallel upward shift in the marginal cost curve. 3. When the price of fabric falls, it does not benefit a clothing manufacturer to lower its prices since that will only reduce its profit margin. 4. If 1,000 yards of denim can produce 10,000 pairs of jean, then 2,000 yards of denim can produce 20,000 pairs of jeans and 30,000 yards of denim can produce 30,000 pairs of jeans. 5. Since Marginal Revenue measures the additional revenue generated by selling one more unit of the product, it must always be positive.
Firm X owns both tea and coffee plantations. It sells directly to the public. If the firm wants to increase the sales for the coffee, assuming that tea and coffee are substitutes, which of these strategies can it employ?
a. Increase the price for the tea b. Offer free expedited shipping on the coffee c. Advertise the tea more heavily d. Both A&B
Refer to Table 9-5. If the required reserve ratio is 10% and the market interest rate is 8%, what is Bolton Bank's opportunity cost of holding the excess reserves it is currently holding?
A) $5.6 million B) $3.2 million C) $0.8 million D) 0; Bolton Bank has no excess reserves.
Answer the following statements true (T) or false (F)
1) If the MPC is .8 in a private closed economy, a $30 billion increase in planned investment will increase equilibrium real GDP by $120 billion. 2) Actual investment consists of planned investment plus unplanned changes in inventories (plus or minus). 3) A $20 billion decrease in investment in a private closed economy that has an MPS of .5 will reduce saving by $10 billion once the multiplier process has ended. 4) Exports are added to, and imports are subtracted from, aggregate expenditures in moving from a closed to an open economy.