Suppose the Fed sells $25,000 in bonds to Luna Corporation. Luna pays for the bonds with a check drawn on Fifth Third Bank, which the Fed deposits. Which of the following happen when Fifth Third Bank pays the check?Select the correct answer below:Fifth Third Bank's reserves in the Fed are increased by $25,000 and the reserves in the entire banking system are increased by $25,000 .Fifth Third Bank's reserves in the Fed are increased by $25,000 and the reserves in the entire banking system are decreased by $25,000 .Fifth Third Bank's reserves in the Fed are decreased by $25,000 and the reserves in the entire banking system are increased by $25,000 .Fifth Third Bank's reserves in the Fed are decreased by $25,000 and the reserves in the entire banking system are decreased by $25,000 .

The Federal Reserve sells $5 million of bonds to a bank, and the bank pays for the bonds by decreasing its reserves. If the reserve requirement is 5%, by how much will the bank's deposits change? Assume the bank has no excess reserves at the Fed.(Include the appropriate sign in your answer if needed.)$100 million

Which of the following does the Fed carefully monitor?Multiple choice question.All deposits made at a bankBank end-of-day balancesThe interest rates banks chargeBank reserves

In an open-market operation, the Fed buys $20 million of government bonds from individual investors.If the required reserve ratio is 7 percent, the largest possible increase in the money supply that could result is $_________million.Put your answer to the second decimal place.  For example, if the answer is 12.3456, put 12.35.

Coles, a supermarket,  pays a commission to a bank for its consulting service during an issue of bonds. Coles has a deposit account at that bank. The central bank deposit at the bank receiving the commission __________________ and the bank deposits in the banking system  ___________________. A.do not change; do not changeB.increase; decreaseC.decrease; do not changeD.do not change; decreaseE.decrease; decrease

1. The government agency that oversees the banking system and is responsible for theconduct of monetary policy in the United States isA) the Federal Reserve System.B) the United States Treasury.C) the U.S. Gold Commission.D) the House of Representatives.2. Individuals that lend funds to a bank by opening a checking account are calledA) policyholders.B) partners.C) depositors.D) debt holders.3. Total reserves are the sum of ________ and ________.A) excess reserves; borrowed reservesB) required reserves; currency in circulationC) vault cash; excess reservesD) excess reserves; required reserves4. Assuming initially that the required reserve ratio = 10%, the currency-deposit ratio = 75%,and the excess reserve ratio = 156%, an increase in the currency-deposit ratio to 150% causesthe M1 money multiplier to ________, everything else held constant.A) increase from 0.73 to 0.78B) decrease from 0.73 to 0.61C) increase from 1.54 to 1.67D) decrease from 1.67 to 1.545. Suppose that from a new checkable deposit, First National Bank holds two million dollarsin vault cash, one million dollars in required reserves, and faces a required reserve ratio of tenpercent. Given this information, we can say First National Bank has ________ million dollarsin excess reserves.A) oneB) twoC) nineD) ten6. If the required reserve ratio is one-third, currency in circulation is $300 billion, checkabledeposits are $900 billion, and there is no excess reserve, then the M1 money multiplier isA) 2.5.B) 2.8.C) 2.0.D) 0.67.7. The interest rate the Fed charges banks borrowing from the Fed is theA) federal funds rate.B) Treasury bill rate.C) discount rate.D) prime rate.8. The monetary base minus currency in circulation equalsA) reserves.B) the borrowed base.C) the nonborrowed base.D) discount loans.