Homework Answers
C) Faster expected economic growth
When long term interest rates go down at the same time that the federal reserve pushes short term rates up then economic growth is expected faster.
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Why might long-term interest rates go down at the same time that the Federal Reserve pushes...
Federal Reserve Chairman Jerome Powell announced the central bank will lower interest rates for the first...
Federal Reserve Chairman Jerome Powell announced the central bank will lower interest rates for the first time since the Great Recession in 2008 to help stave off the possibility of an economic downturn. Federal Reserve Chairman Jerome Powell announced the Fed will lower its target federal funds interest rate by 25 basis points to a range of 2.0% to 2.25%. Powell stated the Fed still viewed the outlook for the U.S. economy as favorable, but the interest rate cut is...
When the Federal Reserve decreases the growth of the money supply, the income afect causes the...
When the Federal Reserve decreases the growth of the money supply, the income afect causes the interest rate to while the liquidity effect drives the interest rate Continuing on the same tran thought when the Fed decreases the growth rate of the money supply the price level ofect drives the interest rate while the expected inflation rate pushes the interest rate Suppose there is an increase in the growth rate of the money supply the liquidity effect is smaller than...
In July 2019 the Federal Reserve lowered interest rates for the first time in a decade....
In July 2019 the Federal Reserve lowered interest rates for the first time in a decade. The Federal Reserve has two missions: to keep unemployment low and to keep inflation low. To reduce the unemployment rate, it cuts rates to increase the money supply and increase aggregate demand. To reduce inflation the Fed raises interest rates to decrease the money supply and tamp down aggregate demand. Right now the unemployment rate is at a 50-year low and inflation is below...
Statements True False When the Fed increases the money supply, short-term interest rates tend to dedine....
Statements True False When the Fed increases the money supply, short-term interest rates tend to dedine. Actions that lower short-term interest rates will always lower long-term interest rates. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in the United States
The Federal Reserve has recently started to adjust interest rates higher after maintaining lower rates in...
The Federal Reserve has recently started to adjust interest rates higher after maintaining lower rates in response to the 2008 recession. What is the economic significance of this change? What will the impact be on the business environment? Please do not copy and paste answer, thank you.
Suppose that the Federal Reserve is concerned about rising inflation, so they increase short- term interest...
Suppose that the Federal Reserve is concerned about rising inflation, so they increase short- term interest rates. How will this affect long-term rates and the yield curve? What does the slope of the yield curve reveal about the effectiveness of the Fed's policy? Explain in the context of the Liquidity Premium Theory.
According to the liquidity premium theory of interest rates, long-term spot rates are totally unrelated to...
According to the liquidity premium theory of interest rates, long-term spot rates are totally unrelated to expectations of future short-term rates. the term structure must always be upward sloping. investors prefer certain maturities and will not normally switch out of those maturities. long-term spot rates are higher than the average of current and expected future short-term rates. investors are indifferent between different maturities if the long-term spot rates are equal to the average of current and expected future short-term rates.
Apart from risk components, several macroeconomic factors-such as Federal Reserve (the Fed) policy
Macroeconomic factors that influence Interest rate levelsApart from risk components, several macroeconomic factors-such as Federal Reserve (the Fed) policy, federal budget deficit or surplus, international factors, and levels of business activity-influence interest rates. Based on your understanding of the impact of macroeconomic factors, identify which of the following statements are true or false: StatementsTrueFalseActions that lower short-term interest rates will always lower long-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in...
Why does Trump want a lower interest rate, or even zero rate? Many times, Trump blamed the Federal Reserve for rising...
Why does Trump want a lower interest rate, or even zero rate? Many times, Trump blamed the Federal Reserve for rising interest rates. Why does Trump want a lower interest rate, or even zero rate? Why do lenders prefer short-term loans? Though long-term loans will give lenders higher interest rate, why do lenders prefer short-term loans?
In 2018, the Federal Reserve, the Central Bank for the U.S., raised the Federal Funds Rate...
In 2018, the Federal Reserve, the Central Bank for the U.S., raised the Federal Funds Rate three times from 1.0% in 2017 to 2.20% in November of 2018. The Fed is likely to continue increasing interest rates in 2019 and 2020. (1) What effect is a higher Federal Funds Rate likely to have on the number of loans banks make, on consumption and on investment? Explain why. (2) Why is the Fed raising interest rates now? Explain how the current...
When the Federal Reserve decreases the growth of the money supply, the income afect causes the interest rate to while the liquidity effect drives the interest rate Continuing on the same tran thought when the Fed decreases the growth rate of the money supply the price level ofect drives the interest rate while the expected inflation rate pushes the interest rate Suppose there is an increase in the growth rate of the money supply the liquidity effect is smaller than...
Statements True False When the Fed increases the money supply, short-term interest rates tend to dedine. Actions that lower short-term interest rates will always lower long-term interest rates. Long-term interest rates are not as sensitive to booms and recessions as are short-term interest rates. The Federal Reserve Board has a significant influence over the level of economic activity, inflation, interest rates in the United States
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