The graph shows an equilibrium in the market for reserves.An open market sale would shift the supply curve to theand cause the federal funds rate toA. left, riseB. right, riseC. left, fallD. right, fallHint: Click on the graph to utilize the graph interactions feature. Select a curve to shift and move the slider in the directionof the shift to draw in the new curve.CFederal Funds RateQuantity of Reserves, RRoR$

The reserve demand curve is downward sloping from left to right. The reserve supply curve is upside…

he graph shows an equilibrium for reserves. in open market sale would shift the supply curve to the and cause the federal funds rate to A. left, rise OB. right, rise OC. left, fall OD. right, fall lint: Click on the graph to utilize the graph interactions feature. Select a curve to shift and move the slider in the direction of the shift to draw in the new curve.

he graph shows an equilibrium for reserves. in open market sale would shift the supply curve to the and cause the federal funds rate to A. left, rise OB. right, rise OC. left, fall OD. right, fall lint: Click on the graph to utilize the graph interactions feature. Select a curve to shift and move the slider in the direction of the shift to draw in the new curve.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 5CQQ

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I dont know if I plotted the lines correclty and answered the questions right.
The federal funds market is shown in the graph below. Assume the market is in equilibrium and that the Federal Reserve has established a 5% target for the federal funds rate. a. Suppose that banks are nervous about the next election and hold more excess reserves, causing the amount of reserves at banks to increase. Show this change in the demand for reserves in the federal funds market. Instructions: Use the tool provided 'Dff1' to draw a new demand for reserves curve. Plot only the endpoints of the line (2 points total). Federal Funds Market Federal Funds Rate (percent) 10 20 30 40 50 60 70 80 90 100 Tools DH1 0 F 4 b. In order to keep the federal funds rate at the target rate, the Fed will need to conduct an open market purchase so the quantity of reserves will increase to meet the change in reserve demand.
a. (i).Draw a graph showing equilibrium in the money market. Carefully label all curves andaxes and explainwhy the curves have the slopesthey do.(ii). Using the graph you prepared in a(i), illustrateand explain what happens when the Central Bankdecreases the money supply.(iii).When the Central Bankdecreases the money supply, theequilibrium level ofincome changes. Illustrate andexplain how
Which of the following about saving deposits a-under M2 supply, they they are bank accounts that you cannot white a check from directly. generally moneyl to be kept asided. you can easily withdraw money cash from these aacounts at an automatic teller machine or back d- included in M1 money supply these are the monies held in checking accounts. they are called demand deposits or chekable deposits because the bank must give the deposit holder his money on demand when a check is written or a debit card is used c- included in M1 money supply therefore, very lliquid these are coins and bills that vcirvulate in an economy that are NOT held by the US treasury Federal reserve bank, or in any bank vaults so the cash you havae in your wallet pocket right now d- under M2 money sypplly funds that you invest in where the deposits of many investors are pooled together and invested in a safe way such as short term goverment bods.
Consider the model of supply and demand for central bank money. Assumethat there there are commercial banks. Suppose that people hold 20% of their moneyin currency and 80% of their money in deposits. The central bank sets the reserve-todeposit ratio at 10%. In the first period, the central bank increases the supply of moneyby $200, buying bonds through Open-Market Operations. Use this information to answerthe following questions:(a) For the second period (after the central bank has injected $200 in theeconomy), calculate: (i) the demand for currency, (ii) the amount of deposit held atthe commercial banks, (iii) the demand for reserves held at the central bank, and(iv) the demand for the high-powered money. How much is the additional moneysupply created at the end of the second period?2(b) How much is the additional money supply created at the end of the thirdperiod?(c) As time continues, additional money supply will be created. Calculatethe total increase in the money supply as a…
Please answer the question and graph the new curve with the graph provided! Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
. Assume that the banking system has total reservesof $100 billion. Assume also that required reservesare 10 percent of checking deposits and that bankshold no excess reserves and households hold nocurrency.a. What is the money multiplier? What is the moneysupply?b. If the Fed now raises required reserves to20 percent of deposits, what are the change inreserves and the change in the money supply
Suppose that the reserve requirement for checkingdeposits is 10 percent and that banks do not hold anyexcess reserves.a. If the Fed sells $1 million of government bonds,what is the effect on the economy’s reserves andmoney supply?b. Now suppose that the Fed lowers the reserverequirement to 5 percent but that banks chooseto hold another 5 percent of deposits as excessreserves. Why might banks do so? What is theoverall change in the money multiplier and themoney supply as a result of these actions?
Suppose bank a, which faces a reserve requirement of 10 percent, receives a $1000 cash deposit ftona customer. Assuming that it wishes to hold no reserves, determine hoew much thr bank should lend. Show your answer on bank a balance sheet.
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