Federal Reserve policy requires Sun-Trust Bank to hold 12% of its deposits as reserves. Sun-Trust Bank policy prevents it from h
olding excess reserves. If the Federal Reserve Bank purchases $20 million in bonds from Sun-Trust what will be the result? a. Sun-Trust's loan assets decreases by $20 million
b. Sun-Trust's liability decreases by $20 million
c. Sun-Trust's loan assets increases by $20 million the money supply in the economy increases
If the Federal Reserve Bank buys $ 20 million in Sun-Trust bonds, the money supply in the economy will increase. This is because this purchase allows Sun-trust to increase its reserve by $ 20 million, generating an excess reserve. However, as you saw in the question above, the bank does not accept that the institution maintains excess reserves, which will cause the bank to make loans with this excess. These loans will throw more money on the market, allowing the money supply to rise in the economy.
when the Federal reserves purchases $20 million in bons from sun trust Bank, the holdings of sun-trust bank will decrease by $20 million and its reserve increases by $20,million. But sun trust bank policy prevents it from holding excess reserves. so, bank will loan out this excess reserve which in turn will increase the money supply in the economy.
therefore , the correct answer is D the money supply in the economy increases
While I'm no expert in social studies I can conclude that they were using a figure of speech. I believe they meant his way of thinking was out of the ordinary, taboo, or strange.
The quality of a product is down to how well and painstakingly the producer takes his time to work on what he's selling. An organization which invests much more time into productivity will offer a better product than that which offer lesser time to producing. When more time is involved in productivity, the customer gains with a quality product.
