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 136. If the reserve ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells $65 million of bonds to the public, bank reserves a. increase by $65 million and the money supply eventually increases by $266.67 million. b. increase by $65 million and the money supply eventually increases by $433.33 million. c. decrease by $65 million and the money supply eventually decreases by $266.67 million. d. decrease by $65 million and the money supply eventually decreases by $433.33 million.  137. If the reserve ratio is 10 percent, banks do not hold excess reserves, and people hold only deposits and no currency, when the Fed sells $10 million dollars of bonds to the public, bank reserves a. increase by $1 million and the money supply eventually increases by $10 million. b. increase by $10 million and the money supply eventually increases by $100 million. c. decrease by $1 million and the money supply eventually increases by $10 million. d. decrease by $10 million and the money supply eventually decreases by $100 million.  138. The interest rate the Fed charges on loans it makes to banks is called a. the prime rate. b. the federal funds rate. c. the discount rate. d. the LIBOR.  139. The discount rate is a. the interest rate the Fed charges banks. b. one divided by the difference between one and the reserve ratio. c. the interest rate banks receive on reserve deposits with the Fed. d. the interest rate that banks charge on overnight loans to other banks.  140. The discount rate is a. the rate at which public banks lend to other public banks. b. the rate at which the Fed lends to banks. c. the percentage difference between the face value of a Treasury bond and what the Fed pays for it. d. the percentage of deposits banks hold as excess reserves.  Â

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