Why do U.S. Treasury bills have lower interest rates than large-denomination negotiable bank CDs? O A. Bank CDs are affected by inflation differently than are Treasury bills. B. Treasuries are considered to be risk-free debt instruments. C. Treasury bills are short-term debt instruments, whereas CDs are medium-term debt instruments. D. Treasury rates are set by the Federal Reserve at a greater rate than the market-determined CD rate.
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- ASAP When the economy is in recession and the Fed wants to do expansionary policy, explain what all 4 types of policies they could undertake.Which of the following is NOT true about the FederalReserve?a. It was established by the U.S. Constitution.b. It regulates the banking system.c. It lends to banks.d. It conducts open-market operations.If there is a recession, the Fed would most likely encourage banks to provide loans by: a. buying government securities b. raising the discount rate c. raising the required reserve ratio d. raising the federal funds rate e. selling government securities
- Suppose that the Bank of Canada determines that the Canadian economy is currently overproducing. What can the Central Bank do to slow down economic activity? a. The Central bank can pursue an expansionary monetary policy by increasing the money supply, causing a decrease in the interest rate. As a result, real GDP will increase and the price level will increase. b. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing a decrease in the interest rate. As a result, real GDP will decrease and the price level will decrease c. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing an increase in the interest rate. As a result, real GDP will decrease and the price level will decrease. d. The Central bank can pursue a contractionary monetary policy by decreasing the money supply, causing an increase in the interest rate. As a result, real GDP will decrease and the price level will increase e. The…(c) Monetory policy authorities will respond to the change in price level that occurred in part (b). How might the central bank respond to the change you described in part (b)? (d) Draw a correctly labeled graph of the money market. a. Label the equilibrium interest rate. b. Show on your graph the change in money supply that will occur due to the monetary policy described in part (c). c. Show on your graph the change in interest rates that will occur due to the monetary policy described in part (c). (e) At the same time, assume that policymakers at the Bank of England enforce an expansionary monetary policy.Which one of these policies should the Fed engage in if unemployment is very high and inflation is under control? Select one: a. Buy government bonds through an Open Market Operation b. Print more money and give it directly to tax payers c. Lower corporate and income taxes d. Raise the discount rate e. Lower consumer confidence
- Federal funds A. provide banks with an immediate infusion of reserves. B. are short-term funds transferred between financial institutions, usually for a period of one day. C. actually have nothing to do with the federal government. D. are all of the above..67. During the financial crisis of 2008, the Federal Reserve took extreme policy measures. Which of the following is the BEST characterization of its policy? a. It was a complete reversion to the idea that eventually the economy is self-correcting and the best policy is to wait it out. b. It was a massive injection of liquidity to banks and major purchases of U.S. government securities, which resulted in a near-zero federal funds rate. c. It was a moderate approach that limited monetary growth to the rate of growth of real GDP. d. It was based on a realization that the Federal Reserve was ineffective in the face of such a crisis. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.25. The Fed has in recent years set monetary policy by choosing a target for the federal funds rate, a short-term interest rate at which banks make loans to one another. This statement is a. true b. false c. There is not enough information to answer the question.
- 2) During the financial crises and recession of 2007-09, the Fed lowered the federal funds rate target to 0-0.25%. However, long-term interest rates, like mortgage rates, were still fairly high. One thing the Fed did to lower long-term rates was that the Fed : A) bought long-term bonds B) lowered the long-term interest rates by lowering the reverse repo rate C) lowered the long-term interest rates by lowering the discount rate D) sold long-term bondsAssume that there is an increase in perceived bankruptcy risk. As a result of this we would expect to see a. money demand and interest rates to rise. b. income and interest rates to rise. c. money demand and interest rates to fall. d. money supply to rise and interest rates to fall.1. Identify the circumstances under which budget deficits can lead to inflationary monetary policy.