Suppose that to finance its credit policy, the Fed pays an annual interest rate of 0.25 percent on bank reserves. During the course of the current year, banks hold $1.3 trillion in reserves. What is the total amount of interest the Fed pays banks during the year? The Fed pays banks S billion of interest during the year. (Enter your response rounded to two decimal places.)

Suppose that to finance its credit policy, the Fed pays an annual interest rate of 0.25 percent on bank reserves. During the course of the current year, banks hold $1.3 trillion in reserves. What is the total amount of interest the Fed pays banks during the year? The Fed pays banks S billion of interest during the year. (Enter your response rounded to two decimal places.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the country of Winterfell, the velocity of money is constant. GDP growth is 4% per year, the money stock grows at 14% per year, and the nominal interest rate is 11%. What is the real interest rate? (If your answer is 0.012, please write 1.20, do not include %)
D7 Suppose that people hold 17 cents out of every dollar of deposits as currency. Suppose that banks hold 13 cents out of every dollar of deposits as excess reserves. If the Fed buys $100 billion worth of Treasury securities on the open market, what is the change in the money supply? Make sure to express your answers in billions. Make sure to round your answers to the nearest 100th decimal points. For example, 24.56 for $24.56 billion.
The income elasticity of money demand is ny = 0.7 and the interest rate elasticity of money demand is n₁ = -0.06. Suppose that the central bank increases the money supply by 2.6%, real income increases by 2% and inflation is 3%. What is the percentage increase in the nominal interest rate? -0.3 (or -30%) 0.3 (or 30%) -0.1 (or -10%) 0.1 (or 10%)
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Note: The answer should be typed.
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Answer to 2 decimal digits
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