Suppose in 1978 there is a surprise recession expected to last until 1979 and in response the Bank of England lowers shorts and credibly announces they will remain at that level for the duration of the recession. Immediately following the announcement, the price rose by 1%. By how much did the bank lower shorts?
Functions of the Federal Reserve System
The Federal Reserve System looks after the financial activities and operations of the banking system. It is the apex body that has complete control over the banking regulations. All the guidelines regarding the banking system, money supply, and formulation of the monetary policy come under the purview of the Federal Reserve System. The New York Fed also helps in drafting the monetary policy and supervising the financial system.
Elastic and Inelastic Markets
Measuring the change in percentage of an economic variable with respect to change in a different economic variable is known as elasticity. This change in percentage results in a change in price concerning changes in other factors. In simple terms, when one factor brings a change to another factor, it is called elasticity.
Suppose in 1978 there is a surprise recession expected to last until 1979 and in response the Bank of England lowers shorts and credibly announces they will remain at that level for the duration of the recession. Immediately following the announcement, the price rose by 1%. By how much did the bank lower shorts?
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