The graph shows the demand curve for reserves in the market for bank reserves.8.00-Federal funds rate (percent per year)The federal funds target rate is 4 percent.Draw the supply of reserves curve determined by the Fed to achieve the federalfunds target rate. Label it.7.00-Draw a point at the equilibrium in the market for bank reserves.6.00-5.00-4.00-3.00-2.00-0255075RD100Reserves on deposit at the Fed (billions of dollars)>>> Draw only the objects specified in the question.☑

Detailed explanation:Since the Fed aims to achive the federal funds target rate of 4 percent, the…

Answered: The graph shows the demand curve for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 20 percent. If the Federal Reserve reduces the required reserve ratio to 15 percent, then the bank will now have excess reserves of $0. $5 million. $15 million. $20 million.
The following are data on the Treasury yield curve for July 17, 2012: Time to maturity Interest rate 6 months 0.15% 1 year 0.18% 2 years 0.25% 5 years 0.62% 10 years 1.53% 30 years 2.59% Source: U.S. Department of the Treasury, "Daily Treasury Yield Curve Rates," July 17, 2012. Given these data, why would an investor have been willing to buy a one-year Treasury bill with an interest rate of only 0.18% when the investor could have bought a 30-year Treasury bond with an interest rate of 2.59%? O A. An investor would expect interest rates on short-term bonds to be higher in the future. O B. Investors are exposed to greater interest-rate risk when they buy long-term bonds versus buying short-term bonds. OC. Most investors have a life expectancy for investing purposes of less than 30 years. O D. A andB only. O E. All of the above.
Subject - economics
Economics Graph the Federal Funds market before and after the Federal Reserve's response to the crisis. Note part of that response was to stop paying anything to banks for holding reserves and lowering the discount rate to 1% Start with a discount rate of 2%, a Fed. Funds rate of 1% and the Fed paying .5% on reserves. 24. 25. 26.
Suppose the Federal Reserve has set the money supply at $4 million. The table below shows the interest rate and total demand for money. Interest Rate Demand (in millions) 20% $1 15 2 10 3 5 4 0 5 What is the equilibrium interest rate? Multiple Choice 0 percent 20 percent 10 percent 5 percent
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Consider the following scenario for a bank. It has $200 in reserves, $800 in loans, $400 in securities, $1200 in deposits, and $100 in debt. a) Calculate the bank's capital. b) Calculate the bank's leverage ratio. c) Suppose there is a stock market boom, so that the bank's assets increase by 2 percent. What is the percentage change in the bank's capital? What is the change in the bank's capital in dollars? d) Suppose that, instead of stock market boom, some borrowers default on their debt so that the bank's assets decrease by 2 percent. How much is now the bank's capital?
Suppose the bank decides to invest 45 percent of its excess reserves in short-term securities in order to earn interest. The bank issues a cashier's check to a securities dealer to purchase the securities. The securities dealer deposits the check into an account at a different bank. What will ACME Bank's balance sheet look like after the check has been processed? Fill in the values in the table below. Assume a required reserve ratio of 10 percent. The balance sheet for ACME Bank is shown below.
5
Suppose all banks have zero excess reserves. The Fed buys bonds for $1 million and a bond dealer deposits the check in his or her bank. The required reserve ratio is 8 percent. The bank loans out the maximum it is allowed to a local business. The business writes a check for the full amount for supplies, which is then deposited in another bank. The largest loan the second bank can make is: The largest loan the second bank can make is $. (Round your answer to the nearest dollar.)
The graph shows the demand curve for bank reserves, RD. The current quantity of reserves supplied is $20 billion. Draw a point on the curve that shows the federal funds rate when the quantity of reserves supplied is $20 billion. Label it 1. The Fed wants to set the federal funds rate at 4 percent a year. Draw a supply of reserves curve that achieves the target. Label it. Draw a point to show the new equilibrium federal funds rate. Label it 2. To change the federal funds rate from 5 percent a year to 4 percent a year, the Fed conducts an open market of securities. 8- 7- 6- 5- 4- 3- 2- 1- to 0 Federal funds rate (percent per year) RD Q Q 20 10 30 40 50 60 70 80 Reserves on deposit at the Fed (billions of dollars) >>> Draw only the objects specified in the question. ✔
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