Problem 1
When bond prices go up, interest rates go LO36.1 a. Up. b. Down. c. Nowhere.
Problem 5
A bank borrows \(\$ 100,000\) from the Fed, leaving a \(\$ 100,000\) Treasury bond on deposit with the Fed to serve as collateral for the loan. The discount rate that applies to the loan is 4 percent and the Fed is currently mandating a reserve ratio of 10 percent. How much of the \(\$ 100,000\) borrowed by the bank must it kecp as required reserves? LO36.3 a. \(\$ 0\) b. \(\$ 4,000\) c. \(\$ 10.000\) d. \(\$ 100,000\)
Problem 6
Which of the following Fed actions will increase bank lending? LO36.3 Select one or more answers from the choices shown. a. The Fed raises the discount rate from 5 percent to 6 percent. b. The Fed raises the reserve ratio from 10 percent to 11 percent. c. The Fed initiates reverse repos involving S10 billion worth of Treasury bonds with nonbank financial firms. d. The Fed lowers the discount rate from 4 percent to 2 percent.
