These are Money and Banking True / False Questions. Please answer and provide explanation 1. When Paul Volcker became C
Posted: Sun Jun 05, 2022 4:22 pm
These are Money and Banking True / False Questions. Please
answer and provide explanation
1. When Paul Volcker became Chair of the Board of Governors of the
Federal Reserve in 1979, he saw that the U.S. economy was suffering
from runaway inflation. To offset inflation, Volcker led the
Federal Reserve in enacting an expansionary monetary policy that
resulted in lower interest rates and increased aggregate demand.
(T/F)
2. The “fixed money rule,” as suggested by a group of economists
known as the Monetarists, has become the main principle that the
Federal Reserve currently uses in the formation of its monetary
policy. (T/F)
3. Bank of Seattle has excess reserves of $4,000 and
checkable-deposit liabilities of $100,000 when the required reserve
ratio is 20 percent. If the required reserve ratio is
increased to 25 percent, the bank's excess reserves will be
-$5,000. (T/F)
4. Video Question. Interest in bitcoin and other
cryptocurrencies may be surging, but central banks don’t want to be
left behind by financial innovation. In fact, many of them are
examining how to launch digital versions of their own currencies as
in the case of China in 2021. Why? Many central banks
fear that a widespread adoption of cryptocurrencies could weaken
their control of the financial system. This could cause
financial instability especially because cryptocurrency does not
have the legal or regulatory safeguards that central bank currency
does. (T/F)
answer and provide explanation
1. When Paul Volcker became Chair of the Board of Governors of the
Federal Reserve in 1979, he saw that the U.S. economy was suffering
from runaway inflation. To offset inflation, Volcker led the
Federal Reserve in enacting an expansionary monetary policy that
resulted in lower interest rates and increased aggregate demand.
(T/F)
2. The “fixed money rule,” as suggested by a group of economists
known as the Monetarists, has become the main principle that the
Federal Reserve currently uses in the formation of its monetary
policy. (T/F)
3. Bank of Seattle has excess reserves of $4,000 and
checkable-deposit liabilities of $100,000 when the required reserve
ratio is 20 percent. If the required reserve ratio is
increased to 25 percent, the bank's excess reserves will be
-$5,000. (T/F)
4. Video Question. Interest in bitcoin and other
cryptocurrencies may be surging, but central banks don’t want to be
left behind by financial innovation. In fact, many of them are
examining how to launch digital versions of their own currencies as
in the case of China in 2021. Why? Many central banks
fear that a widespread adoption of cryptocurrencies could weaken
their control of the financial system. This could cause
financial instability especially because cryptocurrency does not
have the legal or regulatory safeguards that central bank currency
does. (T/F)