Which of the following are typical federal fund loan denominations? Check all that apply. O $250,000 $750,000 $8,000,000 $11,000,000 Which of the following are properties of federal funds? Check all that apply. O The interbank loan volume outstanding is less than $100 billion. Most loan transactions have a maturity of 1 to 7 days. Commercial banks are the most active participants in the federal funds market. The federal funds rate is usually lower than the risk-free T-bill rate.

Which of the following are typical federal fund loan denominations? Check all that apply. O $250,000 $750,000 $8,000,000 $11,000,000 Which of the following are properties of federal funds? Check all that apply. O The interbank loan volume outstanding is less than $100 billion. Most loan transactions have a maturity of 1 to 7 days. Commercial banks are the most active participants in the federal funds market. The federal funds rate is usually lower than the risk-free T-bill rate.

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Monetary System

Section: Chapter Questions

Problem 5PA

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23 of 38 Choose the correct description for the following money market instrument. A repurchase agreement is: O A. an overnight loan between banks. o B. a debt instrument sold by a bank to depositors that pays annual interest of a given amount and at maturity pays back the original purchase price. O C. a short-term debt instrument issued by the Canadian government to cover immediate spending obligations. o D. a short-term money market instrument issued primarily by banks and funded from corporations and other banks through loans in which Treasury bills serve as collateral, with an explicit agreement to pay off the debt. Unsure
Question 1) Explain what will happen to M1 and M2 measures of money supply if an individual moves money from demand deposit account to a small-denomination time deposit. Question 2) Issuing marketable securities is the primary way businesses finance their operations. Trueor false? Explain your answer. If a four-year bond with a $2000 face value has a coupon rate of 2.5%, and the currentmarket interest rate is 4%, what is the market price of the bond? If this bond sold for $1900, is theyield to maturity greater or less than 4%? Why?
Since 2009, how much has been borrowed through the federal funds market? O. $787 million O. $43 billion O. $1,148 billion Incorrect O. $0
Reserves Loans = A. 250/0.16 $1,562.5 B. 300/0.16 $1,875 C. 500/0.17 = $2,941.18 D. 300/0.196= $1,530.61 O E. not enough information to determine = Bank North's Balance Sheet Assets $300 Deposits Capital $1,800 $2,100 Refer to the table above. Assume that Bank North is operating at its target reserve ratio and has no excess reserves, and that all commercial banks have the same target reserve ratio. If a new deposit to the Canadian banking system of $500 is deposited at Bank North, the total new deposits created in the banking system can be calculated as follows: Liabilities $1,800 $300 $2,100
Why would a bank prefer making loans by borrowing funds in the fed funds market? Select one: O A. The fed funds rate is less than the interest rate on reserve balances OB. The fed funds market is less regulated than bank reserves O C. Banks need to maintain reserves above the Fed's required reserve ratio O D. Each of these answers is correct Which of the following is (1) calculated with information provided by the Bureau of Economic Analysis, (2) tracks domestic spending on durable goods, non-durable goods, and services, and (3) factors in recent price changes before comparing to an index base? O a. The Consumer Price Index (CPI) O b. The Producer Price Index (PPI) O c. The Personal Consumption Expenditures Price Index (PCEPI) O d. The International Standards Price Index (ISPI)
If the president of a bank told you that the bank wasso well run that it has never had to call in loans, sellsecurities, or borrow as a result of a deposit outflow,would you be willing to buy stock in that bank? Whyor why not?
In regards to savings, an increase in the real interest rate would: Select one: O a. increase the amount of savings and increase the amount of current consumption b. Increase the amount of savings and decrease the amount of current consumption c. decrease the amount of savings and decrease the amount of current consumption O d. decrease the amount of savings and increase the amount of current consumption O O The shadow banking system includes each of the following except: Select one: O O O O a. derivatives. b. hedge funds. c. commercial banks. d. money market funds. Continued long-run economic growth requires that economies: Select one: O O O O a. reach their steady-state levels of capital and output. b. continue to increase their investment rates. c. have high levels of capital stock. d. have institutions in place that encourage research and development of new ideas.
Who are the end-users of banking? O a. Borrowers and government O b. Government and management O c. Depositors and borrowers O d. Depositors and management
Northern Bank: Balance Sheet Assets Liabilities Deposits Capital $7,000 $1,000 $8,000 Reserves $420 $7,580 $8.000 Loans Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and O A. increase its reserves by $140; decrease its deposits by $140 O B. increase its reserves by $280; increase its loans by $380 OC. increase its reserves by $280; decrease its deposits by $280 O D. increase its reserves by $140; decrease its loans by $140 O E. not change its reserves; not change its deposits
How do banks create new deposits by making loans, and what factors limit the amount of deposits and loans they can create? When a bank makes a loan, The amount of loans and new deposits that a bank can create is limited by OA it creates a new deposit for the person who receives the loan; the banks' excess reserves, the desired reserve ratio, and the currency drain ratio O B. the Fed prints more dollar bills; the speed at which the Fed can increase the quantity of bills in circulation and the desired reserve ratio O C. the Fed creates a new deposit for the bank; the bank's total assets and total liabilities O D. the Fed creates a new deposit for the bank; the amount of excess reserves and the desired reserve ratio O E. it creates a new deposit for the person who receives the loan; the banks total assets and total liabilities
Cat bank has deposits of $800 million. It holds reserves of $20 million and government bonds worth $60 million. If the bank sells its loans at market value of $700 million, what will its total assets equal? O $780 million O $510 million O $80 million O $720 million
Most financial assets function as Select one: O a. a store of value and a unit of account but not a medium of exchange O b. a medium of exchange and a store of value but not a unit of account a store of value but not a unit of account nor a medium of exchange O d. a medium of exchange, a store of value and a unit of account ge n this page e here to search