The fomc meets in washington dc but the action in

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Financial Markets and Institutions
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Chapter 5 / Exercise 17
Financial Markets and Institutions
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26.The FOMC meets in Washington DC but the action, in terms of conducting open market operations takes placeat the New York Fed (FRBNY).A) TrueB) FalseCorrect Answer(s):True
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27.During the Great Depression, the excess reserve to deposit ratio rose for a variety of reasons. The impact on the money multiplier was negative. That is, all else constant, a higher excess reserve to deposit ratio lowers themoney multiplier.
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28.In the lectures, we argued that the money (M1) multiplier (since October 2008) has been rising given that bankshave been ‘hoarding’ money (due in part to the fact that the Fed is paying interest on excess reserves) resultingin a rise in their respective reserve to deposit ratios.
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Financial Markets and Institutions
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Chapter 5 / Exercise 17
Financial Markets and Institutions
Madura
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29.If the money multiplier is 3 and the Fed conducts $100 billion of open market sales, then the money supply will increase by $300 billion.
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