Answer:
$25,000
Explanation:
The cash balance for Madison's Corporation is:
= beginning balance + cash collections - cash disbursements
= $35,000 + $50,000 - $80,000 = $5,000
Since Madison can borrow money in $10,000 increments, they need to borrow $20,000 to be able to meet the minimum cash balance.
So their expected ending cash balance is = $5,000 + $10,000 + $10,000 = $25,000
Answer:
a. In this case, its goes for open market sales operations, This is because to increase the value of federal funds, the Fed has to reduce the money supply
b. In this case, its goes for open market purchase operation. This is because an increase in the differential between the discount rate and federal funds rate would encourage the depositary institutions to borrow money from Fed, thereby increasing the supply of money
