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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:

C. Joint Venture

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Companies use Joint Ventures to partner with foreign businesses in order to enter their market. This is what China is proposing in the scenario above, and it has been done in order that China might have a stake in those businesses.

<u>Advantages of a Joint Venture include:</u>

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7 0
3 years ago
Compute the total manufacturing cost for a manufacturer with the following information for the month. Raw materials purchased $
olga_2 [115]

Answer:

Cost of goods manufactured= $87100

Explanation

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Generally accepted accounting principles require that the cost of goods sold shall consist of:

the cost of direct materials

the cost of direct labor

the cost of manufacturing overhead

Expenses that are outside of the manufacturing facilities, such as selling, general and administrative expenses, are not product costs. They are reported as expenses on the income statement in the accounting period in which they occur.

In this exercise:

<u>Cost of goods manufactured:</u>

Direct materials= $56,000

Direct Labor=$15,600

Factory overhead=Factory supervisor salary+ Depreciation expense+Indirect materials= 10,000 +3,700+1,800= $15,500

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3 years ago
You have a portfolio that is invested 14 percent in Stock R, 50 percent in Stock S, and the remainder in Stock T. The beta of St
pantera1 [17]

Answer:

1.41 Approx

Explanation:

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Beta of portfolio = Respective betas × Respective investment weights

1.30 = (0.14 × 0.81) + (0.5  × 1.36) + (0.36 ×  beta of the Stock T)

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6 0
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A

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