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3 years ago

How does the Federal Reserve reduce the money supply in the economy?

Business

2 answers:

IrinaVladis [17]3 years ago

8 0

Answer:

Contractionary; Reserve ratio

Explanation:

If Fed wants to reduce the money supply in an economy then it must follow the contractionary monetary policy and it increases the reserve ratio.

Increase in the reserve ratio will lead to increase the amount of cash that banks are required to hold with Fed and with itself. And, this will also reduce the lending capability of the banks, so less amount of money would be used for giving loans which reduces the money supply in an economy.

Anni [7]3 years ago

3 0

Answer:

Using Contractionary monetary policy, the federal reserve increases Interest Rates to reduce the money supply in the economy.

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The principle of _____ says that if we are in a position to ease the agony of another and we can do so without excessive cost to

Dahasolnce [82]

I sent that like pulling the plug

7 0

3 years ago

A sporting goods manufacturer budgets production of 57,000 pairs of ski boots in the first quarter and 48,000 pairs in the secon

umka2103 [35]

Answer:

Cost of purchase for first quarter = $766,500

Explanation:

Total production of current quarter = 57,000 pairs

Raw material required for above = 57,000 X 2 kg per pair = 114,000 kg

Less: Opening inventory of raw material 28,500 kg = 114,000 - 28,500 = 85,500 kg required for quarter 1

Also provided that closing inventory shall be 25% of total raw material required for next quarter.

Raw material required in second quarter = 48,000 pairs X 2 kg each = 96,000 kg

25% of above = 96,000 X 25% = 24,000 kg

Total raw material to be purchased in current quarter that is first quarter = 85,500 kg + 24,000 kg = 109,500 kg

Rate not provided assumed to be same as of opening inventory that is $7 per kg, therefore cost of purchase for first quarter = 109,500 kg X $7 = $766,500

3 0

3 years ago

Read 2 more answers

The production facility for a space shuttle would probably be organized according to a ________ layout.

mylen [45]

Answer:

fixed-position

Explanation:

7 0

2 years ago

Burnett Corp. pays a constant $9.80 dividend on its stock. The company will maintain this dividend for the next 14 years and wil

lys-0071 [83]

Answer:

The current price of the stock is $68.42

Explanation:

The dividends on a stock that pays a constant dividend and will cease paying dividend after a defined period can be treated as an annuity. The dividends are constant and are paid after equal interval of time and for a defined period of time. To calculate the price of the share today, we will use the formula for the present value of ordinary annuity. The formula is,

Present value = 9.8 * [ 1 - (1+0.11)^-14 / 0.11 ]

Present value or current price of the stock = $68.42

6 0

3 years ago

You are choosing between these four investments and you want to be 95% certain that you do not lose more than 8.00% on your inv

borishaifa [10]

Answer: B. Corporate Bonds and T-Bills

Explanation:

As you want to be 95% certain, this would require a 95% confidence interval.

With the given returns and standard deviations, the range of returns expected will be computed by;

Upper limit = Return + 2*SD

Lower limit Return - 2*SD

Stocks

Upper Limit = 18.37% + 2 (38.79%)

= 96.0%

Lower Limit = 18.37% - 2 (38.79%)

= -59.2%

S&P 500

Upper Limit = 11.84% + 2(20.01%)

= 51.9%

Lower Limit = 11.84% - 2(20.01%)

= -28.2%

Corporate Bonds

Upper Limit = 6.47% + 2(6.98%)

= 20.4%

Lower Limit = 6.47% - 2(6.98%)

= -7.5%

T-Bills

Upper Limit = 3.46% + 2(3.14%)

= 9.7%

Lower Limit = 3.46% - 2(3.14%)

= -2.8%

The lower limit show the lowest return achievable given a 95% confidence level.

Only Corporate Bonds and T-Bills will give a minimum that is above 8% so they should be chosen.

5 0

3 years ago