Question

Which of the following would be true for the banking system if there were no government?...

Which of the following would be true for the banking system if there were no government? regulation?

A.

Bank owners would bear all the risks of bank failures.

B.

The money supply would never fluctuate.

C.

Borrowers would bear all the risks of bank failures.

D.

The money supply would be determined by individual banks.

The Federal Reserve influences the long-run real interest rate

LOADING...

through? ____________.

A.

adjustments to expected inflation.

B.

the? long-term federal funds rate.

C.

the? short-term federal funds rate.

D.

the discount rate.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Part 1

Answer is The money supply would be determined by individual banks

All of the following would be true for the banking system if there was no government regulationexcept.

  • The money supply would be determined by individual banks.
  • Depositors would bear all the risks of bank failures.
  • The money supply would be subject to abrupt changes.

According to this, option A, B and C are not correct.

Part 2

Answer is adjustments to expected inflation.

The expected long-run level of the real federal funds rate, which--together with long-run inflation expectations makes up the level of the nominal federal funds rate that is expected to prevail in the long run.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The Federal Reserve influences the long-run real interest rate LOADING... through? ____________. A. the discount rate....
The Federal Reserve influences the long-run real interest rate LOADING... through? ____________. A. the discount rate. B. the? short-term federal funds rate. C. adjustments to expected inflation. D. the? long-term federal funds rate.
1. The responsibilities of the U.S. Federal Reserve System include ________. overseeing the banking system and...
1. The responsibilities of the U.S. Federal Reserve System include ________. overseeing the banking system and regulating the quantity of money in the economy setting the level of real interest rates working with Congress to devise a financial plan for the country and execute the President's orders calculating and reporting the unemployment rate 2. To increase the supply of money when the economy is weak, the Fed ________. closes banks reduces inflation sells bonds buys bonds 3. The federal funds...
1. If China is going to maintain its peg with the dollar despite its trade surplus,...
1. If China is going to maintain its peg with the dollar despite its trade surplus, what must the Bank of China do if it has no Sovereign Wealth Fund? a.   Short sell dollars in exchange markets b.   Reduce its vast holdings of dollars c.   Increase its holdings of dollars d.   Raise the value of its currency to discourage export surpluses e.   Create a new currency 2. Pick the two answers to the following: What would be the immediate effect on M1 of a bank...
The FOMC has instructed the FBRNY Trading Desk to purchase $480 million in US Treasury securities....
The FOMC has instructed the FBRNY Trading Desk to purchase $480 million in US Treasury securities. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. Assume US banks withdraw all excess reserves and give out loans. A. Assume that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? ___ in bank deposits...
The FOMC has instructed the FRBNY Trading Desk to purchase $360 million in U.S. Treasury securities....
The FOMC has instructed the FRBNY Trading Desk to purchase $360 million in U.S. Treasury securities. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. Assume U.S. banks withdraw all excess reserves and give out loans. a. Assume also that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? b. What is...
The FOMC has instructed the FRBNY Trading Desk to purchase $770 million in U.S. Treasury securities....
The FOMC has instructed the FRBNY Trading Desk to purchase $770 million in U.S. Treasury securities. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. Assume U.S. banks withdraw all excess reserves and give out loans. a. Assume also that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? b. What is...
4. Identify for each of the following whether the actual multiplier in the banking system is...
4. Identify for each of the following whether the actual multiplier in the banking system is rising or falling?                                                                                                     30 points Banks increase their reserves beyond what is necessary. The Federal Reserve lowers the target Fed Funds rate. Households hoard currency more than before. The Federal Reserve raises the Required Reserve Rate. Currency increasingly disappears into the underground economy or overseas. The Federal Reserve sells bonds.
Some economists have advocated replacing government deposit insurance with 100-percent reserve banking. Under this plan, banks...
Some economists have advocated replacing government deposit insurance with 100-percent reserve banking. Under this plan, banks would hold all deposits as reserves. Deposit insurance would no longer be necessary because banks would always have the reserves to meet customer withdrawals. a. What would happen to the money supply (defined as currency and bank deposits) in the transition from fractional reserve to 100-percent reserve, if this plan were implemented, holding other factors constant? b. What will be the value of the...
i)    Tilaknesia has a reserve ratio of 20% in its banking system. Calculate the simple money multiplier.                     &nbs
i)    Tilaknesia has a reserve ratio of 20% in its banking system. Calculate the simple money multiplier.                                                                               (0.5 marks) On a given day customers deposit $3,300 into their banks. Based on the simple money multiplier calculated in part i), calculate the total amount that the money supply in the banking system will eventually increase to.                       (0.5 marks) Calculate the total amount that the money supply in the banking system will eventually increase to if the reserve ratio decreases to 16%.  Assume the amount of...
Suppose there are $1000 of reserves in the banking system. Assume that banks are required to...
Suppose there are $1000 of reserves in the banking system. Assume that banks are required to hold 5% of their deposits as required reserves. Assume further, that banks wish to hold zero excess reserves. a. What is the total amount of deposits in the banking system? b. If banks decided to hold reserves in excess of those required what would happen to the money multiplier and the money supply? Why? c. If households decided not to deposit all their money...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT