Exhibit 19-4 Balance sheet of Tucker National Bank
Assets
Liabilities
Required reserves$ 4,000
Checkable deposits$20,000
Excess reserves16,000
Loans 0
Total$20,000
Total$20,000
Assume all banks in the system started with the balance sheet shown in Exhibit 19-4 and the Fed makes a $1,000 open market purchase. The result would be a(n):
A. infinite contraction of the money supply.
B. infinite expansion of the money supply.
C. $1,000 expansion of the money supply.
D. $5,000 expansion of the money supply.
Answer: D
You might also like to view...
A command system is a method of organizing production that
A) uses a market-like mechanism inside the firm. B) relies on competitive markets. C) uses a managerial hierarchy. D) uses incentives most extensively.
Suppose a scientific breakthrough made free solar power available in unlimited quantities in the United States. The effect of this invention would be to move the
A) United States beyond its production possibilities frontier. B) United States inside its production possibilities frontier. C) U.S. production possibilities frontier outward. D) U.S. production possibilities frontier inward.
The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total fixed cost of producing 10 baseball hats per hour is
A) $400 B) $200 C) $22 D) More information is needed to answer the question.
Which of the following is a correct reason for stating that the United States has a fiduciary monetary system? I. Our money is convertible to a fixed amount of silver or gold. II. Our money has a predictable value
A) I only B) II only C) Both I and II D) Neither I nor II