When Fed buys securities from the public, banks' reserves increases and the quantity of money reduces in supply.
<h3>What are Securities?</h3>
Securities simply put are assets that has monetary values like bonds, stocks and they can be traded.
In recent times, people enjoy the digital form of money/securities like cyptocurrencies.
Learn more about Securities here:
brainly.com/question/25720881
#SPJ1
Answer:
(D). surrogate interaction and direct interaction.
Explanation:
Process Chain Network (PCN) analysis involves designing an organization's processes in such a way that it brings about better interaction with customers.
The PCN analysis highlights three process areas which are; <u>surrogate interaction, direct interaction</u> and independent processing areas.
<em>Service operations only exist within the areas of </em><em>surrogate interaction and direct interaction</em><em>, because they require more interaction with customers and are more personal in nature.</em>
Answer:
1. In the short run, wages and other prices are stagnant making the economy to run below or above the normal level. In the long run, wages and prices are fully flexible, and this allows the economy to run at its natural level.
2. This distinction is important because it helps us to see how difficult it could be to sustain the real gross domestic product and employment rates thus making the economy to run at a normal level or achieve its full potentials.
Explanation:
Stickiness or stagnancy of wages can be seen in the fact that it is most time difficult to fluctuate or change the wages of workers overtime. The prices of most goods are also sticky when they remain unchanged over a given period of time. These conditions exist in the short run, and make the economy to run above or below its full potentials. The real GDP and unemployment levels are negatively affected.
In the long run, flexibility of wages and prices are achieved and this makes the economy to run at its full potentials. The real GDP as well as the employment rate are at their optimum level then.
The money multiplier is 5. And the total money supply increase by $2,000 million if the Federal Reserve increases reserves by $400 million.
Given,
The Federal Reserve sets the reserve requirement at 20%.
Banks hold no excess reserves, and no additional currency is held.
- The money multiplier displays the amplitude of the change in the money supply as a result of the addition of new reserves to the banking system.
- Banks use the money they are not obligated to retain in reserve to make loans, and the borrowed money shows up on other customers' deposit accounts.
- In macroeconomics, the money multiplier is significant because it controls the money supply, which influences interest rates.
- Because it affects monetary policy and the stability of the banking industry, it is also significant in the banking industry.
The money multiplier formula can be used to calculate the total amount of new deposits or money created.
Money multiplier = 1/reserve ratio
= 1/0.20
= 5
change in Total money supply = Money multiplier × change in reserves
= 5 × $400 million
= $2,000 million
Hence, The money multiplier is 5. And the total money supply increase by $2,000 million if the Federal Reserve increases reserves by $400 million.
Learn more about Federal Reserve Bank:
brainly.com/question/999538
#SPJ1
