Hey I could use some help answering these homework questions
Assume that the currency-deposit ratio is 0.2 and the reserve-deposit ratio is 0.4. The Federal Reserve carries out an open-market operation purchasing $10 million worth of bonds from banks. This action will increase the money supply by _____ .
Flag this Question Question 2 When the Federal Reserve extends a discount loan to a bank, the monetary base ________ and reserves ________.
increases; remain unchanged |
remains unchanged; increase |
remains unchanged; decrease |
Question 3:Flag this QuestionIf the Federal Reserve wants to stimulate the economy and increase inflation, it can _____ .
decrease the reserve requirement |
decrease the interest paid on reserve |
buy bonds in financial markets |
Flag this Question Question 4: To stimulate the economy during the Great Recession, the Federal Reserve _____ .
used forward guidance to influence financial markets expectations |
implemented a large-scale asset purchase program to drive down long-term interest rates |
decreased the Federal Fund Rate target near zero |
Flag this Question Question 5 If inflation is below its target rate of 2 percent and output is below potential, the Taylor rule predicts _____ .
an increase in the real interest rate |
an increase in the Federal Fund Rate |
a decrease in the real interest rate |
a decrease in the Federal Fund Rate |
Flag this Question Question 6 Yield curves are steeply upward sloping when,
short-term interest rates are above long-term interest rates |
short-term interest rates are about the same as long-term interest rates |
future short-term interest rates are expected to fall |
future short-term interest rates are expected to rise |
Flag this Question Question 7 The yield curve is usually upward sloping because,
TIPS bonds are traded in less liquid markets than nominal treasuries |
financial markets are not efficient |
inflation expectations are typically positive |
investors demand a term premium to hold long-term bonds |
Flag this Question Question 8 Suppose that you observe that the yield on 10-year treasuries increase to 5% whereas the yield on short-term treasuries remain close to 0%. According to the Expectation Hypothesis you would interpret this observation as a sign that
short-term bond yields in the future are likely to rise above 5% |
the fed may soon increase the Federal Fund Rate target |
the market expects future output to exceed potential output |
Flag this Question Question 9: The money supply may change without the central bank intervention.
Flag this Question Question 10: The yield curve can be upward sloping even if future short-term interest rates are expected to decrease.