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Questions and Answers
How does the monetary base, the money multiplier, and the money supply change when the Fed increases the interest rate it pays banks for holding reserves?
The monetary base decreases, the money multiplier decreases, and the money supply decreases.
How does the monetary base, the money multiplier, and the money supply change when the Fed reduces its lending to banks?
The monetary base decreases, the money multiplier decreases, and the money supply decreases.
What is the money supply when all money is held as demand deposits and banks hold 20 percent of deposits as reserves?
The money supply is $5,000.
What is the money supply when people hold equal amounts of currency and demand deposits, and banks hold 20 percent of deposits as reserves?
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Is the statement 'The only way that the Fed can affect the level of borrowed reserves is by adjusting the discount rate' true, false, or uncertain?
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What does the Fed promote by not releasing the minutes of FOMC meetings to Congress or the public immediately?
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