what is the influence of the fed-funds rate on other rates?
Homework Answers
In U.S. fed funds rate refers to the rate of interest at which the depository institutions such as credit unions and banks lend Federal Reserve funds to other depository institutions overnight on the uncollateralized basis. The Fed doesn't actually set other rates; however it determines the fed funds rate, which often impacts the short-term and variable (adjustable) interest rates. The most important rates influenced by the fed funds rate is the prime rate, the prevailing rate which the banks charge from the best customers. The prime rate impacts several consumer interest rates, including bank loans, rates on deposits, credit cards, and adjustable mortgage rates
What is the Fed Funds rate? What is the difference between the target Fed Funds rate...
What is the Fed Funds rate? What is the difference between the target Fed Funds rate and the effective Fed Funds rate? Why is the Fed considering a cut in the Fed Funds Rate? What are bank reserves? What are required reserves? What are excess reserves?
What happens to the fed funds rate when the Fed increases the reserve requirements? Draw the...
What happens to the fed funds rate when the Fed increases the reserve requirements? Draw the graph and explain what happens to the federal funds rate.
In Dec, 2018 the fed funds rate is 2.25-2.5% which is the rate that banks charge...
In Dec, 2018 the fed funds rate is 2.25-2.5% which is the rate that banks charge each other to borrow reserves overnight. The fed controls the supply of bank reserves by buying or selling Treasury Securities. (Buying treasuries raises the supply of bank reserves and therefore lowers the fed funds rate) It is also gradually undoing quantitative easing(QE) which means shrinking its balance sheet which has assets of 4Trillion! The fed had expanded its balance sheet by creating money to...
In Dec, 2018 the fed funds rate is 2.25-2.5% which is the rate that banks charge...
In Dec, 2018 the fed funds rate is 2.25-2.5% which is the rate that banks charge each other to borrow reserves overnight. The fed controls the supply of bank reserves by buying or selling Treasury Securities. (Buying treasuries raises the supply of bank reserves and therefore lowers the fed funds rate) It is also gradually undoing quantitative easing (QE) which means shrinking its balance sheet which has assets of 4Trillion! The fed had expanded its balance sheet by creating money...
When the Fed is easing monetary policy it is: A) lowering the fed funds target rate...
When the Fed is easing monetary policy it is: A) lowering the fed funds target rate and buying bonds B) lowering the fed funds target rate and selling bonds C) increasing the fed funds target rate and buying bonds D) increasing the fed funds target rate and selling bonds
What is the Fed Funds rate and how does it compare to Eurodollars? How does the...
What is the Fed Funds rate and how does it compare to Eurodollars? How does the Fed Funds rate compare to SOFR?
The discount rate is the interest rate paid by: the Fed to banks who deposit funds...
The discount rate is the interest rate paid by: the Fed to banks who deposit funds with it. the Fed to the Treasury to buy U.S. government securities. O banks when they borrow from the Fed. O banks when they borrow from each other.
1. Given the Taylor Rule, if nominal inflation is 4.3%, the FED target inflation rate is 2%, the real Fed Funds rate is...
1. Given the Taylor Rule, if nominal inflation is 4.3%, the FED target inflation rate is 2%, the real Fed Funds rate is 0.7%, the log of real output is 3.0155, and the log of potential output is 3.0445; what should the be the FED's Fed Funds target rate?
What is the organizational structure of the Fed? How does the Fed influence monetary policy? How...
What is the organizational structure of the Fed? How does the Fed influence monetary policy? How has the Fed revised its lending role in response to the credit crisis? How is monetary policy used in other countries?
Assume that the equilibrium real fed funds rate is 2% and that an appropriate target for...
Assume that the equilibrium real fed funds rate is 2% and that an appropriate target for inflation would also be 2%. The country's potential GDP growth rate is known as 3%. Suppose that the current inflation rate is 3% and actual growth rate is 4%. (a) Then, what would be the central bank's target interest rate implied by Taylor Rule? (b) Suppose current monetary policy interest rate (fed funds rate) is 8%. Evaluate the current monetary policy stance using the...
In Dec, 2018 the fed funds rate is 2.25-2.5% which is the rate that banks charge each other to borrow reserves overnight. The fed controls the supply of bank reserves by buying or selling Treasury Securities. (Buying treasuries raises the supply of bank reserves and therefore lowers the fed funds rate) It is also gradually undoing quantitative easing(QE) which means shrinking its balance sheet which has assets of 4Trillion! The fed had expanded its balance sheet by creating money to...
In Dec, 2018 the fed funds rate is 2.25-2.5% which is the rate that banks charge each other to borrow reserves overnight. The fed controls the supply of bank reserves by buying or selling Treasury Securities. (Buying treasuries raises the supply of bank reserves and therefore lowers the fed funds rate) It is also gradually undoing quantitative easing (QE) which means shrinking its balance sheet which has assets of 4Trillion! The fed had expanded its balance sheet by creating money...
The discount rate is the interest rate paid by: the Fed to banks who deposit funds with it. the Fed to the Treasury to buy U.S. government securities. O banks when they borrow from the Fed. O banks when they borrow from each other.
1. Given the Taylor Rule, if nominal inflation is 4.3%, the FED target inflation rate is 2%, the real Fed Funds rate is 0.7%, the log of real output is 3.0155, and the log of potential output is 3.0445; what should the be the FED's Fed Funds target rate?
Assume that the equilibrium real fed funds rate is 2% and that an appropriate target for inflation would also be 2%. The country's potential GDP growth rate is known as 3%. Suppose that the current inflation rate is 3% and actual growth rate is 4%. (a) Then, what would be the central bank's target interest rate implied by Taylor Rule? (b) Suppose current monetary policy interest rate (fed funds rate) is 8%. Evaluate the current monetary policy stance using the...
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