Which of the following is a traditional tool used by the Fed during recessions?

Q: Suppose that Federal Reserve increases the money stock by 20%. Create a graph that shows the…

A: The demand side of economic policy is monetary policy, which refers to the measures taken by a…

Q: If the Federal Reserve wants to keep aggregate demand (i.e. spending growth) stable, what will it do…

A: The objective of the question is to understand the role of the Federal Reserve in managing the money…

Q: Current monetary policy Go to the Web site for the Federal Reserve Board of Governors…

A: Using the information in the question, the latest press release of the FOMC regarding monetary…

Q: What tools does the Feds use to control money supply? List and briefly describe each. How are those…

A: The discount rate, reserve ratios, open market operations, and interest on reserves are four…

Q: What are the main determinants of the federal funds rate?

A: Federal funds rate is the rate at which commercial banks borrow from and lend to each other.

Q: Briefly explain why "currency" is Fed's liability (listed in the liabilities side of its balance…

A: Federal Reserve Bank have the sole authority to print currency in the country

Q: What happens when a bank borrows from the Fed’s “discount window”

A: The discount window is a lending facility provided by the Fed to banks and other depository…

Q: If the economy is able to self-correct from a negative GDP gap, why might the Fed wish to intervene…

A: A self-correcting economy refers to one that has the ability to stabilize the market without…

Q: What did the Fed do in 2007 to deal with the underutilization) of the discount rate window

A: The 2007 financial crisis began in earlier years with economical credit and lending of tax standards…

Q: Describe the Fed’s monetary policy actions over the course of the  2020 year and  identify whether…

A: Considering the impacts of COVID-19 on financial action and on dangers to the viewpoint, the FOMC…

Q: One of the advantages of monetary policy is its speed and flexibility, but there are limitations.…

A: Monetary policy is the policy of the central bank of the economy to influence the money supply in…

Q: Explain the roll of the Fed funds rate. How do increases and decreases in the rate affect the money…

A: Federal funds rate is the target rate set at which the commercial banks lend and borrow excess…

Q: Let's say that the Fed is concerned about recession. It would use [Select] doing so is [Select]…

A: The Fed is the short name for the Federal Reserve System, which is also the central bank of the US.…

Q: Suppose the Federal Reserve decreases the money stock. Create a graph that explains the effect of…

A: Monetary policy is the central bank's policy of money supply and interest rate to influence the…

Q: The Fed has an obligation of the "full employment mandate". What is that exactly? How is it…

A: The Federal Reserve in the U.S was created on 23rd December 1913. It is the central bank of the U.S.…

Q: Fill in the blanks The tools that the Fed uses to influence the economy are  (blank) , (blank)  ,…

A: The following problem has been answered as follows:

Q: Please graphically show and explain how the Fed raises interest rate before 2008 and after 2015…

A: The central bank of a nation utilizes this tool to regulate the money supply in the economy,…

Q: In what ways does the Fed utilize their monetary policy tools to affect or counter-balance fiscal…

A: Fiscal policy refers to the method of government spending and tax policies to take a control over…

Q: Briefly describe the main policy tools that Fed use in conducting its monetary policy

A: Monetary policies are adopted by Fed for controlling the monetary as well as financial status with…

Q: Analyse why modern central banks have tended to keep the interest rate at a given level rather than…

A: The management of money supply and interest rates is a crucial responsibility of modern central…

Q: The former chairman of the Federal​ Reserve, Alan​ Greenspan, used the term​ "irrational exuberance"…

A: If the economy grows too fast, asset bubbles form which might go bust and the economy may crash.…

Q: What methods can be used by the FED to influence interest rates? Are these methods effective?

A: Please find the answer below.

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.