Question

Question 1 1 pts Suppose that in the market for reserves, the federal funds rate is both, less than the discount rate (iff <

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Option, supply and fall.

Reason: When the required reserve ratio is reduced by the Fed, the money supply increases. The interest rates fall due to increase in competition and excess funds available with the banks.

Add a comment
Know the answer?
Add Answer to:
Question 1 1 pts Suppose that in the market for reserves, the federal funds rate is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 10. The discount rate and the federal funds rate The discount rate is the interest rate...

    10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate is the interest rate that banks charge one another...

  • 8. Federal funds rate targeting Aa Aa In conducting monetary policy, the Federal Open Market Committee (FOMC) targets a Federal funds rate and the Federal Reserve Bank of New York uses open-marke...

    8. Federal funds rate targeting Aa Aa In conducting monetary policy, the Federal Open Market Committee (FOMC) targets a Federal funds rate and the Federal Reserve Bank of New York uses open-market operations to achieve and maintain the target rate. Suppose that the following graph shows the demand for Federal funds. Use the orange line (square symbols) to plot the supply of Federal funds (also called "the supply of excess reserves") when the FOMC targets a Federal funds rate of...

  • 9. The discount rate and the federal funds rate The discount rate is the interest rate...

    9. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower spread between the discount rate and the federal funds rate decreases banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate...

  • AFederal Funds Rate Use the figure and supply and demand analysis of the market for reserves...

    AFederal Funds Rate Use the figure and supply and demand analysis of the market for reserves to answer the following question. What would happen to the federal funds rate if it were initially at i and there was a switch from deposits into currency (holding everything else constant)? O A. The federal funds rate would stay at it. ** OB. The federal funds rate would increase to i OC. The federal funds rate would fall to 1 OD. The federal...

  • 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...

  • 10. The discount rate and the federal funds rate The discount rate is the interest rate...

    10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to The federal funds rate is the interest rate that banks charge one another...

  • 10. The discount rate and the federal funds rate The discount rate is the interest rate...

    10. The discount rate and the federal funds rate The discount rate is the interest rate on loans that the Federal Reserve makes to banks. Banks occasionally borrow from the Federal Reserve when they find themselves short on reserves. A lower discount rate banks' incentives to borrow reserves from the Federal Reserve, thereby the quantity of reserves in the banking system and causing the money supply to ipply to . The federal funds rate is the interest rate that banks...

  • Use Figure to answer the following questions. Federal Funds Rate The discount rate is the initial...

    Use Figure to answer the following questions. Federal Funds Rate The discount rate is the initial equilibrium federal funds rate. R01 Rd Rd2 RS In the federals funds market, the Federal Reserve can maintain a federal funds rate between the interest paid on reserves and the discount rate without using open market operations. O A. True OB. False NBR* Quantity of Reserves, R

  • Suppose that id > iff > ior, and then the FRB increases the required reserve ratio...

    Suppose that id > iff > ior, and then the FRB increases the required reserve ratio for commercial banks. Consequently, in the federal funds market, the equilibrium rate will.. (Please Explain Answer). rise fall not change none of the above

  • The figure is drawn such that the discount rate, is above the federal funds rate What...

    The figure is drawn such that the discount rate, is above the federal funds rate What would happen to the federal funds rate if there was a switch from deposits into currency (holding everything else constant) and the federal funds rate was initially at the discount rate (# = (d)? O A. The federal funds rate would rise. OB. The federal funds rate would stay at it. O C. The federal funds rate would fall. OD. The outcome cannot be...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT