Business, 23.07.2020 05:01 Geo777

Suppose the reserve requirement is 10% and that the Federal Reserve has established a 6% target for the federal funds rate. The federal funds market and the money market are in equilibrium as shown in the graphs below. a. Suppose the Federal Reserve decides it needs to lower the federal funds rate from 6% to 5%. It will require a $20 billion open market purchase to achieve this goal. Show this change in the supply of reserves curve and indicate the new quantity of reserves in the federal funds market. Instructions:
Draw a new supply of reserves curve. Use the tool provided "New Quantity' to plot the new equilibrium quantity of reserves in the federal funds market.
b. If the Federal Reserve makes an open market purchase of $20 billion, the total money supply will increase by $ billion.
c. When the total money supply increases, there will be an adjustment to the interest rate in the money market. Use the money market graph and show the change in the money supply and interest rates in the money market.
Instructions: Draw a new money supply curve. Use the tool provided 'New Equilibrium' to plot a new equilibrium and interest rate.
d. When the Fed lowers the target federal funds rate, reserves , causing the money supply to , and interest rates (for borrowing and lending money) will .

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 22:30

Match the vocabulary word to the correct definition. 1. human resources department 2. job description 3. ethics 4. labor relations 5. occupational safety & health administration a. a detailed list of the functions and requirements for a position b. the exchange between the employer and employee c. principles that define appropriate conduct d. the government agency responsible for monitoring safety in the workplace e. the division of a business responsible for hiring, managing,maintaining, and firing the workforce

Answers: 1

Answer

Business, 22.06.2019 13:50

Diamond motor car company produces some of the most luxurious and expensive cars in the world. typically, only a single dealership is authorized to sell its cars in certain major cities. in less populous areas, diamond authorizes a single dealer for an entire state or region. the manufacturer of diamond automobiles is using a(n) distribution strategy for its product.

Answers: 2

Answer

Business, 22.06.2019 21:40

Rebel technology maintains its records using cash-basis accounting. during the year, the company received cash from customers, $43,000, and paid cash for salaries, $23,500. at the beginning of the year, customers owe rebel $1,000. by the end of the year, customers owe $6,600. at the beginning of the year, rebel owes salaries of $5,600. at the end of the year, rebel owes salaries of $3,300. determine cash-basis net income and accrual-basis net income for the year.

Answers: 2

Answer

Business, 23.06.2019 02:30

Organizations typically rely on schedules, such as hourly wages and annual reviews and raises.

Answers: 2

Answer

You know the right answer?

Suppose the reserve requirement is 10% and that the Federal Reserve has established a 6% target for...

Questions