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boyakko [2]
3 years ago
15

Assume that the reserve requirement is 20%. Also, assume that banks do not hold excess reserves and there is no cash held by the

public. The Federal Reserve decides that it wants to expand the money supply by $40 million.
a. If the Fed is using open-market operations, will it buy or sell bonds?
b. What quantity of bonds does the Fed need to buy or sell to accomplish the goal? Explain your reasoning.
Business
1 answer:
olga_2 [115]3 years ago
7 0

<u>Answer:</u>

Federal bank increase initial reserves (by purchase of government bonds) by $8 million, to increase money supply by $40 million

<u>Explanation:</u>

Open market operations refer to buying 7 selling of government securities, to regulate money supply. To increase money supply, central bank buys the government bonds. As, purchase transaction from commercial bank or public imply they have more liquid money supplied.

Money multiplier reflects the multiple change in total money deposits, due to increase in initial deposits.

Final Deposits = (1 / RR) x Initial Deposits; where RR =  Reserve requirement

Needed increase in money supply = 40 million, Reserve requirement = 20%

∴ 40 = ( 1 / 0.20 ) x Initial deposits

40 = 5 x Initial Deposits

Initial Deposits = 40 / 5

Initial deposits = 8

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Answer:

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Explanation:

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Cost of equity=0.104→ 10.4%

The company's cost of equity if the current stock price is $40.12 per share is 10.4%.

8 0
3 years ago
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Agreed to work together to control the price of domestic steel.

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<h3>What are the objectives of antitrust law?</h3>

The Sherman Act, the nation's first antitrust statute, was enacted by Congress in 1890 as a "comprehensive charter of economic liberty designed to maintain open and unhindered competition as the rule of commerce." The antitrust laws generally prohibit unauthorized mergers and business practices, leaving it to the courts to determine which ones are prohibited based on the specific facts of each case.

From the era of horses and buggies to the modern digital era, courts have applied antitrust rules to evolving marketplaces. Nevertheless, for more than a century, the antitrust laws have had the same fundamental goal: to safeguard the competitive process for the benefit of consumers, by ensuring that there are strong incentives for businesses to operate effectively, keep prices low, and keep quality high.

<h3>The three core federal antitrust laws:</h3>
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Learn more about antitrust laws here:

brainly.com/question/8431756

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5 0
1 year ago
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Answer:

d. percentage change in the quantity demanded of one good divided by the percentage change in the price of another good.

Explanation:

Price-demand elasticity measures the demand sensitivity of a good when a change in the price of another good occurs. For example, what happens to the demand for bread when the price of butter varies? This depends on the cross elasticity of demand since these goods tend to be complementary.

 The price elasticity of cross demand between two goods is easily calculated by a formula where the numerator is the change in the quantity of a good and the denominator is the percentage change in the price of the complementary good.

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Fofino [41]

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