Explain the effect on the demand for reserves or the supply of reserves of the following Fed policy action: A decrease in the discount rate. A. This would decrease the supply of reserves. B. This would lower the interest rate at which the demand curve becomes horizontal. O C. This would raise the interest rate at which the demand curve becomes horizontal. D. This would lower the interest rate at which the supply for reserves becomes horizontal.

Explain the effect on the demand for reserves or the supply of reserves of the following Fed policy action: A decrease in the discount rate. A. This would decrease the supply of reserves. B. This would lower the interest rate at which the demand curve becomes horizontal. O C. This would raise the interest rate at which the demand curve becomes horizontal. D. This would lower the interest rate at which the supply for reserves becomes horizontal.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Managing expectations of the Fed Funds rate in order to achieve lower long- term interest rates is known as and is aimed at the economy. O quantitative easing, tightening O forward guidance, stimulating O quantitative easing, stimulating O forward guidance, tightening
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2. Problems and Applications Q2 If the Fed wants to increase the money supply, it can If the Fed wants to decrease the money supply, it can If the Fed wants to increase the money supply, it can bonds in open-market operations. the reserve requirement. the interest rate it pays on reserves. When the FOMC decreases its target for the federal funds rate, the money supply will If people decide to hold less currency after a rash of pickpocketing, the money supply
Increasing non-borrowed reserves by buying bonds in OMO causes what effect in the demand and supply of reserves? O demand to shift to the right O supply to shift to the right demand to shift to the left O supply to shift to the left
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Which of the following best explains why a large increase in the supply of bank reserves can have no effect on the equilibrium effective federal funds rate? The demand for bank reserves becomes perfectly elastic at the interest rate the Fed pays on reserves. The supply curve for bank reserves is upward sloping relative to the federal funds rate, The quantity of reserves demanded by banks is negatively related to the federal funds rate. O The supply of bank reserves become perfectly elastic at the primary discount rate set by the Fed.
1. If the demand for money curve shifts from Md1 to Md0 the equilibrium interest rate will.. Increase from 5% to 10% Decrease from 7% to 5% Increase from 5% to 7% Remain at 7% 2. If the demand for money curve shifts from Md1 to Md0 and the interest rate remains at 5% there will be An equilibrium in the money market An excess demand for money An equilibrium in the bond market An excess supply of money
What is the Fed Funds Rate? the interest rate the Fed pays on reserves stored in the federal funds market O the amount of cash banks must keep on hand at any given time O the interest rate charged to banks on reserves borrowed from the Federal Reserve the interest rate banks charge each other for reserves borrowed from another bank
Helicopter Money Primer: The possible next frontier in quantitative easing Central banks-the Fed, the Bank of Japan, the European Central bank, the People's Bank of China, and others-have bought trillions of dollars of bonds. The Fed alone has bought $4 trillion-worth. What are the Fed's policy tools and which policy tool did the Fed use to increase its assets to $4 trillion? Source: Da The Fed's policy tools include O A. the required reserve ratio, discount rate, and government expenditure B. extraordinary crisis measures, marginal tax rates, and the discount rate OC. open market operations, marginal tax rates, and government expenditure OD. the required reserve ratio, discount rate, and open market operations To increase its assets to $4 trillion, the Fed used O A. the discount rate O B. required reserve ratios O C. a printing press to print more currency O D. large-scale open market operations called quantitative easing Click to select your answer. MacBook A DII 20 D00 000 F12 F10…