Which of the following Fed actions will increase bank lending? Select one or more answers from...

Which of the following Fed actions will increase bank lending? Select one or more answers from the choices shown

The Fed lowers the discount rate from 4 percent to 2 percent

The Fed raises the reserve ratio from 10 percent to 11 percent

The Fed raises the discount rate from 5 percent to 6 percent

The Fed sells bonds to commercial banks

Solutions

Expert Solution

Option A.

The Fed uses three main monetary policy tools in order to regulate the money supply and bank lendings. They are, discount rate, open market operations and the reserve requirements.
To increase the bank lendings the money supply within the economy must Increase.
This happens when the Fed makes some purchases, lowers the discount rate and the reserve requirements.
Selling of bonds, raising required reserve ratio and discount rate will only decrease the money supply and thereby decrease bank lendings.
But when the Fed lowers the discount rate from 4 to 2 percent, the banks can give out more loans as they will be having enough reserves left even after giving out the loans.

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

Which of the following actions will increase bank lending? Instructions: You may select more than...

Which of the following actions will increase bank lending? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. The Bank of Canada buys $400 million worth of bonds from chartered banks. The chartered banks raise the desired reserve ratio from 10 to 11 percent. The Bank of Canada lowers the bank rate from 4 to 2 percent. The Bank of...

Select all that applies. There may be more than one correct answers. Which of the following...

Select all that applies. There may be more than one correct answers. Which of the following is a correct initialization of a C string? Group of answer choices string s[20] = "C++"; string s = "C++"; char s[20]; char* s = "C++"; char s[20] = {'C', '+', '+', '\0'}; char s[20] = ""; char s[20] = "C++";

The actions of which of the following could influence the money supply? Select one: a. the...

The actions of which of the following could influence the money supply? Select one: a. the federal reserve, commercial banks, and the nonbanking public b. the federal reserve and commercial banks only c. the nonbanking public only d. commercial banks only True or false: An open market purchase is expansionary monetary policy. If bank reserves are 200, the public holds 500 in currency, and the desired reserve-deposit ratio is 0.20, the money supply is ________. Select one: a. 1,300 b....

Which of the following statements are true? Multiple answers: You can select more than one option...

Which of the following statements are true? Multiple answers: You can select more than one option A If unemployment benefits are increased¸ the minimum cost of a unit of effort for the employer will rise. B If the wage doesn’t change¸ employees will work harder in periods of high unemployment. C If workers continue to receive benefits however long they remained unemployed¸ an increase in the level of unemployment will have no effect on the best response curve. D If...

An increase in the PV cell temperature will: Select one or more: a. Increase the maximum...

An increase in the PV cell temperature will: Select one or more: a. Increase the maximum power of the cell b. Decrease the current of the cell c. Decrease the open circuit voltage of the cell d. Decrease the maximum power of the cell e. Increase the open circuit voltage of the cell Question 2 Not yet answered Marked out of 1.0 Flag question Question text What is the water outlet pressure of a Pelton turbine? Select one: a. Less...

The FED (Central Bank in the USA) is watching the actions of the federal government and...

The FED (Central Bank in the USA) is watching the actions of the federal government and believes that federal government spending will increase next quarter which will lead to future rates of inflation greater than 3 percent. a. Using the Money Supply Model explain how the FED will use its TOOLS and affect inflation. Define the key macro terms and the Money Supply Model in business friendly terms. b. Businesses are concerned about both inflation and higher interests. Explain why...

Bond Relationships. Select one or more of the following phrases to complete the following sentences. increase,...

Bond Relationships. Select one or more of the following phrases to complete the following sentences. increase, decrease, par, discount, premium, less than, more than, greater , less a. If the current interest rate exceeds the bond’s coupon rate, the bond will sell at a ___________. b. The value of a bond to increase if there is a/an ________ in interest rates. c. A bond’s coupon rate is more than the interest rate, therefore the bond is selling at a _____________....

Bond Relationships. Select one or more of the following phrases to complete the following sentences. increase,...

11. Finance companies have recently experienced an increase in subprime lending characterized by Select one: a....

11. Finance companies have recently experienced an increase in subprime lending characterized by Select one: a. higher costs of loan servicing and collection. b. borrowers with low or non-existent credit record. c. higher fee, higher interest rate loans. d. All of the above 12. An individual private pension plan that allows individuals to set aside a certain sum of employment income, subject to a maximum, into an account without having to pay tax on it and the interest earned on...

Which of the following statements are correct (Select all that apply): Select one or more: A....

Which of the following statements are correct (Select all that apply): Select one or more: A. An income statement reports on financing activities. B. A balance sheet reports on investing and financing activities. C. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time. D. A balance sheet reports on a company's assets and liabilities over a period of time. E. The statement of equity reports on changes in the...

Subjects