llen mean by "reserves were no longer relatively scarce"? ancial crisis, banks chose to hold relatively low levels of excess reserves, but since the 2007-2009 financial crisis, banks are choosing to hold significantly more excess reserves. why, with the monetary policy tools it had used prior to the financial crisis, the Fed could not control the federal funds rate. excess reserves moved to near zero, open market operations by the Fed had very little impact on the federal funds rate. ed was not able to conduct open market operations before the 2007-2009 financial crisis and instead had to rely on discount lending to influence the federal funds rate. excess reserves became abundant, changes in reserves due to open market operations led to almost no movement in the federal funds rate. excess reserves became abundant, changes in reserves due to open market operations led to uncontrollably large movements in the federal funds rate.

llen mean by "reserves were no longer relatively scarce"? ancial crisis, banks chose to hold relatively low levels of excess reserves, but since the 2007-2009 financial crisis, banks are choosing to hold significantly more excess reserves. why, with the monetary policy tools it had used prior to the financial crisis, the Fed could not control the federal funds rate. excess reserves moved to near zero, open market operations by the Fed had very little impact on the federal funds rate. ed was not able to conduct open market operations before the 2007-2009 financial crisis and instead had to rely on discount lending to influence the federal funds rate. excess reserves became abundant, changes in reserves due to open market operations led to almost no movement in the federal funds rate. excess reserves became abundant, changes in reserves due to open market operations led to uncontrollably large movements in the federal funds rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

Assume that the Federal Reserve finds that the banking system has inadequate reserves, that is, the supply curve falls in the downward sloping portion of the demand curve for reserves. Under an ample reserves regime, we expect the Federal Reserve to A use open market purchases of government securities to reduce the supply curve of reserve. B use open market purchases of government securities to increase the supply curve of reserve. C use open market sales of government securities to reduce the supply curve of reserve. D use open market sales of government securities to increase the supply curve of reserve.
Assume the Federal Reserve has a federal funds rate target (ffr*) at 1.5%. If there is anunexpected decrease in the demand for reserves and the Federal Reserve wants to maintainthe target rate, how does it affect the money supply? Explain with the aid of a supply anddemand for reserves diagram.
If the price level increases by 0.2 percent for every $100 billion increase in the money supply, by how much might prices rise if the Fed increases total reserves by $120 billion and the reserve requirepemt is 0.10?
Bank A:Reserves on hand $38,000Deposit in the Fed $30,000US government bonds $12,000Checking account balances $120,000Savings account balances $25,000Bank B:Reserves on hand $50,000US government bonds $7500Savings account balances $20,000Checking account balances $100,000 In addition, people in this economy hold $8800 in cash, and all banks have the same reserve requirements we've used all semester. Calculate the (economy-wide) currency ratio, carefully following all numeric instructions. Do not convert the ratio into percent. In other words, if you get k of 0.99, enter only 0.99 in the blank.
Refer to table below. Suppose that the Fed had decided to set the U.S. money supply in December 1932 and in December 1933 at the same value as in December 1930. a. Assuming that the values of currency held by the public and the reserve-deposit ratio had remained as given in the table, what should the values of bank reserves be to reach the stated target for the U.S. money supply? Instruction: enter all responses rounded to two decimal places Money Supply Currency held by public Reserve-deposit ratio Actual Bank reserves Needed Bank reserves December 1930 $44.1 billion $3.85 billion 0.075 $3.31 billion $3.31 billion December 1932 $44.1 billion $4.82 billion 0.109 $3.18 billion billion December 1933 $44.1 billion $4.85 billion 0.133 $3.45 billion billion b. In order to accomplish this objective, the Fed would have had to conduct open market purchases to increase bank reserves by $ _______ billion in 1932 and $_________ billion in 1934.
The Fed achieves its federal funds rate target _______. A. level by setting the discount rate and the interest on reserves rate B. range because whatever the supply of reserves, the rate is between the discount rate and the interest on reserves rate C. level by conducting daily open market operations D. range by setting the supply of reserves equal to the quantity of reserves demanded at the range midpoint
2.2
If velocity and aggregate output remain constant at 5and $1,000 billion, respectively, what happens to theprice level if the money supply declines from $400 billion to $300 billion?
The demand curve and supply curve for one-year discount bonds with a face value of $1,050 are representedby the following equations:Bd: Price = -0.8 * Quantity + 1160Bs: Price = Quantity + 720Suppose that, as a result of monetary policy actions, theFederal Reserve sells 90 bonds that it holds. Assume thatbond demand and money demand are held constant.a. How does the Federal Reserve policy affect the bondsupply equation?b. Calculate the effect on the equilibrium interest rate in this market, as a result of the FederalReserve action.
Breifly describe how the Fed creates bank reserves and more monetary transactions in the economy than the actual volume of currency issued by the federak reserve banks. Assume that the reserve requirment by the Fed on bank deposits is 1/10. Also assume that the bank under consideration have zero excess reserve (all ER is lent out). With fixed currency in circulation, what specific monetary policy tool can the Fed use to increase checking account deposits to 1,000 million?
The money stock measured as M1 is growing at the rate of 5% per year. If real GDP is growing at 2% per year, and the income velocity of circulation of money is constant, Select one: the economy will achieve noninflationary growth O b. the inflation rate will be around 1%. O c. the inflation rate will be around 5% O d. the inflation rate will be around 3%.
suppose the reserve requirement is 10 percent and the balance sheet of the peoples national bank looks like the accompanying example.ASSETSvault cash - $20,000deposits at fed - 30,000securities - 45,000loans - 120,000LIABILITIESchecking deposits - $200,000net worth - 15,000answer the following:A. what are the required reserves of people national bank? does the bank have any excess reserves?B. what is the maximum loan that the bank could extend?C. indicate how the banks balance sheet would be altered if it extended this loan.D. suppose that the required reserves were 20 percent. if this were the case, would the bank be in a position to extend any additional loans? explain