In this Decision Point activity you learned about how changes to monetary policy by the Federal Reserve should impactyour own decisions and the decisions of everyone across the economy. Apply what you learned in this decision point to thefollowing questions.One of the tools the Fed uses to influence interest rates is to pay banks interest on excess reserves they hold overnight withthe Fed.You're a director at a bank. Your bank currently holds $185 million in excess reserves at the regional Fed and you'reearning an annual rate of 2.42% on those excess reserves sitting at the Fed.The Fed decides to decrease the interest rate it pays on excess reserves from an annual rate of 2.42% to 1.55%. In response,you shouldthe amount of excess reserves held at the Fed and makeany given interest rate.loans at

The interest rate on excess reserves is an important tool used by the Fed to control the interest…

Answered: In this Decision Point activity you…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(a) The Federal Reserve Bank of the United States (i.e., the Fed) is responsible for financing the operations of the federal government. True or false? Explain. (b) Changes in reserve requirements are an effective monetary policy tool that the Fed uses frequently to control the money supply. True or false? Explain.
Part 1:What is the major objective of monetary policy in the US economy? Explain why. Part 2:How is the chairperson of the Federal Reserve selected? Part 3: Find the names of the current chairperson of the Federal Reserve and members of the Board of Governors of the Federal Reserve System. Part 4: What is the purpose of the Federal Open Market Committee (FOMC)?
Which one of these policies should the Fed engage in if unemployment is very high and inflation is under control? Select one: a. Buy government bonds through an Open Market Operation b. Print more money and give it directly to tax payers c. Lower corporate and income taxes d. Raise the discount rate e. Lower consumer confidence
Which of the following are objectives that the Bank of Canada tries to achieve when setting monetary policy? Check all that apply.
Which one of these is not one of the three main policy tools the Federal Reserve uses to conduct monetary policy? Required Reserve Ratios Federal Reserve requirements Discount Rate Open Market Operations
Which of the following is not a function of the Fed? 1) Setting reserve requirements for banks. 2) Advising Congress on fiscal policy. 3) Regulating the supply of money. 4) Serving as a lender of last resort.
One effect of the September 11, 2001, terrorist attacks was to temporarily prevent banks from accessing reserves they needed to meet the demands of their customers. (This occurred because the attacks destroyed many records as well as the computers required to access backup records, and it took affected banks several weeks to become fully operational.) In response, the Fed made many billions of dollars of reserves available to banks, gradually withdrawing the new reserves from the banking system as that system returned to normal. Suppose the Fed had not injected reserves in this way. What would likely have happened to interest rates as a result? What would have been the likely impact on the stock market and on spending by consumers and businesses? Would the unemployment rate have gone up or down? Explain your reasoning in each case.
Please answer the question below. Thank you!
The Federal Reserve has decided to sell treasury bonds on a regular basis over the next few weeks. Identify by name and describe in detail the specific tool that is being used by the Federal Reserve, and then based on what it is doing, explain whether you would recommend borrowing at this time or waiting until later, and explain why.
Which of the following is the role of the Federal Reserve System? Select one: a. Set the Required Reserve Ratio for Bank of America b. Manage the account for South Carolina and other state governments c. Make loans to local businesses d. Print new money e. All of these are roles of the Fed
Consider the following hypothetical scenario: actual GDP is measured to be 3% below potential. Measured unemployment, by most accounts, is thought to be 2% above the natural rate of unemployment. If inflation is relatively low: In this scenario, what would the Federal Reserve most likely do at the next few Federal Open Market Committee (FOMC) meetings? Assuming the Fed follows the policy course you set forth in part (1), what should the Fed be concerned with in the years that follow?
The Federal Reserve (also called the Fed) is the central bank of the United States. The Fed oversees the currency and money supply. The Fed system consists of five major parts: (1) the board of governors, (2) the Federal Open Market Committee, (3) 12 Federal Reserve banks, (4) three advisory councils, and (5) the 3,000 member banks in the system. The board of governors administers and supervises the 12 Federal Reserve banks. The 7 members of the board are appointed by the President of the United States and confirmed by the U.S. Senate. The Federal Open Market Committee has 12 voting members and is the policy-making body. The Federal Reserve is a private firm not supported by taxpayer dollars. The Fed buys and sells foreign currencies, regulates various types of credit, supervises banks, and collects data on the money supply and other economic activity. The Fed's actions directly affect everyone in terms of credit card rates, consumer prices, and student loan rates. The Fed uses three…

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