For all numerical answers, just type in the number - no $ signs, no commas, no words. Thanks! Suppose you are the manager the trading desk back when the fed was in the old system of targeting the federal funds rate. It is morning and your staff estimates reserve demand to be Rd = 100 - 5 if and the target for the funds rate is 4% (use 4 in calculations) assuming you have perfect control over the amount reserves in the system (reserve supply). How many reserves are needed to hit the target established by the FOMC? Billion Scenario #1 The next morning, your staff realizes that a shock occurred overnight and they now estimate reserve demand to be: Rd = 120 - 5 if and the target for the funds rate is still 4% (use 4 in calculations) How many reserves are needed to hit the target established by the FOMC? 24 Billion
For all numerical answers, just type in the number - no $ signs, no commas, no words. Thanks! Suppose you are the manager the trading desk back when the fed was in the old system of targeting the federal funds rate. It is morning and your staff estimates reserve demand to be Rd = 100 - 5 if and the target for the funds rate is 4% (use 4 in calculations) assuming you have perfect control over the amount reserves in the system (reserve supply). How many reserves are needed to hit the target established by the FOMC? Billion Scenario #1 The next morning, your staff realizes that a shock occurred overnight and they now estimate reserve demand to be: Rd = 120 - 5 if and the target for the funds rate is still 4% (use 4 in calculations) How many reserves are needed to hit the target established by the FOMC? 24 Billion
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![For all numerical answers, just type in the number - no $ signs, no commas, no words. Thanks!
Suppose you are the manager the trading desk back when the fed was in the old system of targeting the federal funds rate. It is morning and your staff estimates reserve
demand to be
Rd = 100 - 5 if and the target for the funds rate is 4% (use 4 in calculations)
assuming you have perfect control over the amount reserves in the system (reserve supply).
How many reserves are needed to hit the target established by the FOMC?
2$
Billion
Scenario #1
The next morning, your staff realizes that a shock occurred overnight and they now estimate reserve demand to be:
Rd = 120 - 5 if and the target for the funds rate is still 4% (use 4 in calculations)
How many reserves are needed to hit the target established by the FOMC?
2$
Billion
Scenario #2 (back to original conditions before Scenario #1)
The FOMC meets and decided to lower the federal funds target to 2% (use 2 for calculations) due to the pandemic.
How many reserves are needed to hit the new target established by the FOMC?
2$
Billion
We now consider what the Fed did in March of 2020. Due to the pandemic, the Fed went back to the zero bound. In order to lower the federal funds rate, the Fed
conducted open market purchases to increase reserve supply.
Type in T for True and F for False.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73687238-2011-45d1-86ef-01c7b70593bf%2F8c1b9302-da0a-4dcb-b104-8098f17fef30%2Fy1th2ced_processed.jpeg&w=3840&q=75)
Transcribed Image Text:For all numerical answers, just type in the number - no $ signs, no commas, no words. Thanks!
Suppose you are the manager the trading desk back when the fed was in the old system of targeting the federal funds rate. It is morning and your staff estimates reserve
demand to be
Rd = 100 - 5 if and the target for the funds rate is 4% (use 4 in calculations)
assuming you have perfect control over the amount reserves in the system (reserve supply).
How many reserves are needed to hit the target established by the FOMC?
2$
Billion
Scenario #1
The next morning, your staff realizes that a shock occurred overnight and they now estimate reserve demand to be:
Rd = 120 - 5 if and the target for the funds rate is still 4% (use 4 in calculations)
How many reserves are needed to hit the target established by the FOMC?
2$
Billion
Scenario #2 (back to original conditions before Scenario #1)
The FOMC meets and decided to lower the federal funds target to 2% (use 2 for calculations) due to the pandemic.
How many reserves are needed to hit the new target established by the FOMC?
2$
Billion
We now consider what the Fed did in March of 2020. Due to the pandemic, the Fed went back to the zero bound. In order to lower the federal funds rate, the Fed
conducted open market purchases to increase reserve supply.
Type in T for True and F for False.
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