27) During the 2008 recession, the Federal funds "Discount" rate was set by the Fed at a record low of 0.25%. In the same year, inflation was 3.85%. According to the relationship between real interest rates, nominal rates and inflation (the Fisher effect) this meant that per every $100 that a) banks lent out to customers, they had to return $385 in profits. b) the US Treasury got in loans, c) the Fed got from the US Government, $25 in payments $25 in nominal terms $96.4 in real term $0.25 in real terms. d) banks borrowed from the Fed to put in their reserves, e) banks borrowed from the Fed to put in their reserves,

27) During the 2008 recession, the Federal funds "Discount" rate was set by the Fed at a record low of 0.25%. In the same year, inflation was 3.85%. According to the relationship between real interest rates, nominal rates and inflation (the Fisher effect) this meant that per every $100 that a) banks lent out to customers, they had to return $385 in profits. b) the US Treasury got in loans, c) the Fed got from the US Government, $25 in payments $25 in nominal terms $96.4 in real term $0.25 in real terms. d) banks borrowed from the Fed to put in their reserves, e) banks borrowed from the Fed to put in their reserves,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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27) During the 2008 reqession, the Federal funds "Discount" rate was set by the Fed at a record low of 0.25%.
In the same year, inflation was 3.85%. According to the relationship between real interest rates, nominal
rates and inflation (the Fisher effect) this meant that
per every $100 that
they had to return
$385 in profits.
a) banks lent out to customers,
b) the US Treasury got in loans,
*
$25 in payments
$25 in nominal terms
$96.4 in real term
$0.25 in real terms.
c) the Fed got from the US Government,
d) banks borrowed from the Fed to put in their reserves,
e) banks borrowed from the Fed to put in their reserves,

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