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The immediate effect of her deposit on the money supply is that it increases the reserves of the bank, allowing the bank to lend more money. When she deposits funds, the bank is required to hold a fraction as reserves but can lend out the excess, effectively creating new money through the lending process. This process can lead to a multiplier effect, where the initial deposit results in a greater overall increase in the money supply as loans are made and re-deposited.
What else can I help you with?
If the federal reserve sells 40000 in treasury bonds to a bank at 5 interest what is the immedate effect on the money suppy?
When the Federal Reserve sells $40,000 in Treasury bonds to a bank, it decreases the money supply by that amount. The bank pays for the bonds using its reserves, which reduces the reserves available for lending. Consequently, this action tightens the money supply, as there is less money available in the banking system for loans and other transactions. The interest rate of 5% is relevant for future borrowing but does not directly affect the immediate change in the money supply from this transaction.
What is the most likely effect of the Federal Reserve lowering the discount rate on overnight loans?
The most likely effect of the Federal Reserve lowering the discount rate on overnight loans would be an increase in the money supply. an increase in the money supply
What is share money deposit?
Profit reinvested i the company by its share holders is called share deposit money
How long does it take for deposited money to post to your account?
In most cases it'll be 4-5 working days for a cheque deposit. Obviously, cash would be immediate.
Can I deposit a money order in my bank?
Yes, you can deposit a money order in your bank.
If the federal reserve sells 40 000 in treasury bonds to a bank with 5 interest what is the immediate effect on the money supply?
If the federal reserve sells $40,000 in treasury bonds to a bank with 5% interest the immediate effect on the money supply is an decrease of $40,000.
If the federal reserve sells 50000 in Treasury bonds to bank at 6 interest what is the immediate effect on the money supply?
it is decreased by 50000
Will the money supply increase if people deposit their cash into a demand deposit account?
yes
If the Federal Reserve sells 50000 in Treasury bonds to a bank at 6 interest what is the immediate effect on the money supply?
It Is b
Why money multiplier and money supply greater than demand deposit?
The money multiplier effect illustrates how an initial deposit can lead to a greater increase in the total money supply through the banking system's lending practices. When banks hold only a fraction of deposits as reserves and lend out the rest, each loan creates new deposits, effectively multiplying the original amount of money. Consequently, the total money supply can exceed the initial demand deposits due to this cycle of lending and re-depositing, leading to a higher overall liquidity in the economy.
If there is an excess supply of money?
deposit more into interest-bearing accounts, and the interest rate will fall.
What are the factor that effect money supply?
Bank rate
What is an immediate annuity rate?
An immediate annuity is an annuity that begins making payments to you shortly after you deposit your money. The rate of interest you earn on this depends on age, payment options, and other factors.
Predict what will happen to the money supply if there is a sharp rise in the currency ratio?
The money supply falls. The rise in c means that there has been a shift from deposits which undergo multiple deposit expansion to currency which does not. Thus overall level of multiple expansion declines, and the money multiplier and money supply fall.
If the federal reserve sells 80000 in treasury bonds to a bank at 4 intrest what is the immediate on the money supply?
When the Federal Reserve sells $80,000 in treasury bonds to a bank, it effectively reduces the money supply by that amount. This is because the bank pays for the bonds using its reserves, which decreases the reserves available for lending. As a result, the immediate impact is a contraction in the money supply, as the transaction removes liquidity from the banking system. The interest rate at which the bonds are sold (4% in this case) does not directly affect the immediate change in the money supply but can influence future lending and economic activity.
Why might the money supply not expand by the amount predicted by the deposit expansion multiplier?
The reserve requirement could change.
What describes how Lowering the required ratio increases the money supply?
Makes the deposit multiplier bigger. - Dustin SELU
