Answer:
A. True
Explanation:
Large commercial and retail banks have been choosing to increase the amount of excess reserves they hold in the Federal Reserve, and this has caused an increase in the money multiplier and the money supply.
This is true as an increase in the Federal reserves would lead to increased room for loan and lending facilities which would also help increase the money supply of the populace.
Answer:
The correct answer is: firms are unlikely to undertake investment.
Explanation:
The liquidity trap is a situation described in the Keynesian economy according to which, liquidity injections into the private banking system by the central bank do not lower interest rates or inject money into the economy and therefore do not stimulate economic growth as claimed by monetarism.
The liquidity trap occurs when people accumulate cash because they expect an adverse event, such as deflation, reduction in aggregate demand and GDP, an increase in the unemployment rate or a war. People are not buying, companies are not borrowing and banks are not lending either because they do not have enough solvency since the economic outlook is uncertain and investors do not invest because the expected returns on investments are low.
The most common characteristics of a liquidity trap are interest rates close to zero and fluctuations in the monetary base that do not translate into fluctuations in general price levels.
Answer:
Market price of the bond = $912.53
Explanation:
YTM = 6.90%
Coupon rate = 5.87%
Number of compounding per year = 2
YTM Per perid = 0.0345
Years = 13
Number of period = 26 (Nper)
Par value = 1,000
Semi annual coupon rate = 0.02935
The semi annual coupon payment = Par value * Semi annual coupon rate = 1,000 * 0.02935 = $29.35
Market price of the bond = PV(YTM, Nper, Semi annual coupon payment,Par value)
Market price of the bond = $912.53
