Financial
What is the interest rate of 6-month treasury bills on May 30th, 2019? Is it larger or smaller than the interest rate of 1-year treasury bills on that day? Why? https://www.federalreserve.gov/.
What are the reserve requirements according to the Federal Reserve System? How does the Fed use it to fight against the financial crisis? If the required reserve ratio is 8%, how much of a new $15,000 deposit can a bank lend? What is the potential impact on the money supply?
The annualized discount rate on a particular money market instrument, is 4.25%. The face value is $100,000, and it matures in 45 days. What is its price? What would be the price if it had 62 days to maturity?
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Questions 1 to 10 are false statements. Please re-write each statement so that it is true....
Questions 1 to 10 are false statements. Please re-write each statement so that it is true. It may be as simple as one word change or more complex. 3. Money market security prices and yields are more sensitive to changes in interest rates than long-term corporate bonds. 4. The majority of money market securities are low denomination, low risk investments designed to appeal to individual investors with excess cash. 5. Most money market securities are initially sold to individual investors....
1.What could the Federal Reserve have done to fight the Great Depression? a.Increase the money supply...
1.What could the Federal Reserve have done to fight the Great Depression? a.Increase the money supply to reduce the interest rate. b.Increase the money supply to raise the interest rate. c.Decrease the money supply to reduce the interest rate. d.Decrease the money supply to raise the interest rate. 2. How could the government have used fiscal policy to fight the Great Depression? a.Reduce taxes, raise transfers, raise government purchases. b.Reduce taxes, reduce transfers, reduce government purchases. c.Raise taxes, reduce transfers,...
Suppose that the Federal Reserve wants to decrease the money supply. Which of the following policies...
Suppose that the Federal Reserve wants to decrease the money supply. Which of the following policies would achieve this goal? Group of answer choices Decrease the reserve requirement. Buy Treasury Bills from banks. Raise the Discount Rate. Decrease the interest rate paid on reserves held at the Fed.
Figure 15-3 27) Refer to Figure 15-3. In the figure above, the movement from point A...
Figure 15-3 27) Refer to Figure 15-3. In the figure above, the movement from point A to point B in the money market would be caused by A) an increase in the price level. B) a decrease in real GDP C) an open market sale of Treasury securities by the Federal Reserve. D) a decrease in the required reserve ratio by the Federal Reserve. 28) If the Fed buys Treasury bills, this will hopefully shift the A) money supply curve...
The Federal Reserve pays interest on the reserve deposits banks hold with the Fed. Explain if...
The Federal Reserve pays interest on the reserve deposits banks hold with the Fed. Explain if and how the banks could earn any profit without cost in the following situations by taking advantage of differences in the Discount rate, Federal funds rate and interest paid on reserves. Banks would just borrow/lend each other or from the Fed or hold reserves in their account. -The discount rate is 2.5%, the effective federal funds rate is 2% and the interest paid on...
Discussion Questions for Tuesday, Apr. 23 1. Suppose the Fed conducts $10 million open market pur...
Discussion Questions for Tuesday, Apr. 23 1. Suppose the Fed conducts $10 million open market purchase from Bank A. If Bank A and all the other banks use reserves to purchase only securities, what will happen to deposits in the banking system and how much does it expand? 2. Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion and required reserve ratio is...
1. The interest rate in the federal funds market: a. is an interest rate that is...
1. The interest rate in the federal funds market: a. is an interest rate that is largely unaffected by the policies of the Fed. b. will fall if the Fed sells bonds and, thereby, reduces the reserves available to banks. c. is determined by the imposition of price controls imposed by the Fed. d. rises when the quantity of funds demanded by banks seeking additional reserves exceeds the quantity supplied by banks with excess reserves. 2. If there is a...
1- The Fed is not permitted to lend money to private banks, even during bank crises....
1- The Fed is not permitted to lend money to private banks, even during bank crises. True or False? 2- If the Federal ----------------------- Market Committee decides to target a higher interest rate it will --------------- Treasury bonds in the bond market. (Fill in the blanks) 3- The U.S., like most nations, has a -------------------- reserve banking system. Private banks must keep a certain portion of their deposits in reserve.( Fill in the blanks) 4- If nominal interest rates increase...
1. The interest rate on Treasury bills (with short maturities) can be thought of as the...
1. The interest rate on Treasury bills (with short maturities) can be thought of as the opportunity cost of holding (non-interest bearing) money. We think of the money stock as being determined by the Federal Reserve. In the liquidity preference graph, we put the interest rate on the vertical axis and the amount of money supplied and demanded on the horizontal axis. An increase in the money supply a. shifts the demand for money curve to the left, which causes...
T F 5. Included on the FOMC of the FED is the Comptroller of the Currency....
T F 5. Included on the FOMC of the FED is the Comptroller of the Currency. T F 6. The demand for loanable funds is supply of bonds, because generally to get someone will lend you money you give them a promise to repay. T F 7. A discount rate lower than the federal funds or market rate expands the money supply. T F 8. If the excess reserve deposit ratio rises, then the money supply rises . T F...
Figure 15-3 27) Refer to Figure 15-3. In the figure above, the movement from point A to point B in the money market would be caused by A) an increase in the price level. B) a decrease in real GDP C) an open market sale of Treasury securities by the Federal Reserve. D) a decrease in the required reserve ratio by the Federal Reserve. 28) If the Fed buys Treasury bills, this will hopefully shift the A) money supply curve...
Discussion Questions for Tuesday, Apr. 23 1. Suppose the Fed conducts $10 million open market purchase from Bank A. If Bank A and all the other banks use reserves to purchase only securities, what will happen to deposits in the banking system and how much does it expand? 2. Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion and required reserve ratio is...
1. The interest rate on Treasury bills (with short maturities) can be thought of as the opportunity cost of holding (non-interest bearing) money. We think of the money stock as being determined by the Federal Reserve. In the liquidity preference graph, we put the interest rate on the vertical axis and the amount of money supplied and demanded on the horizontal axis. An increase in the money supply a. shifts the demand for money curve to the left, which causes...
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