Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Question

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Answer 1

Question

Chapter 19, Problem 1P

To determine

Concept Introduction:

Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Expert Solution & Answer

Explanation of Solution

a. Target Federal fund rate.

Target Federal fund rate is 1.5% on December 13, 2017.

Conclusion:

Thus, current target federal fund rate is 1.5%

b. Comparison of target federal fund rate.

The target federal fund rate of current Federal Open Market Committee (FOMC) statement is 1.5% on December 31, 2017 which was 1.25% on June 14, 2017.
Therefore, the target federal funds rate of current FOMC statement is different from the previous FOMC statement. So it differs by 0.25%.

Conclusion:

Thus, target federal fund rate differs by 0.25%.

c. Macroeconomic condition.

The macroeconomic condition of the U.S can be justified by the FOMC statement regarding federal fund rate. There is an increase in the economic activities of the U.S. and with this increase, the unemployment has decreased.
There is an increase in both consumption and investment. In the short run, the economy is growing and in the long run, inflation is expected.

Conclusion:

Thus, there is an increase in the economic activities of the U.S.

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Answer 2

Question

Chapter 19, Problem 1P

To determine

Concept Introduction:

Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Expert Solution & Answer

Explanation of Solution

a. Target Federal fund rate.

Target Federal fund rate is 1.5% on December 13, 2017.

Conclusion:

Thus, current target federal fund rate is 1.5%

b. Comparison of target federal fund rate.

The target federal fund rate of current Federal Open Market Committee (FOMC) statement is 1.5% on December 31, 2017 which was 1.25% on June 14, 2017.
Therefore, the target federal funds rate of current FOMC statement is different from the previous FOMC statement. So it differs by 0.25%.

Conclusion:

Thus, target federal fund rate differs by 0.25%.

c. Macroeconomic condition.

The macroeconomic condition of the U.S can be justified by the FOMC statement regarding federal fund rate. There is an increase in the economic activities of the U.S. and with this increase, the unemployment has decreased.
There is an increase in both consumption and investment. In the short run, the economy is growing and in the long run, inflation is expected.

Conclusion:

Thus, there is an increase in the economic activities of the U.S.

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Answer 3

Question

Chapter 19, Problem 1P

To determine

Concept Introduction:

Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Expert Solution & Answer

Explanation of Solution

a. Target Federal fund rate.

Target Federal fund rate is 1.5% on December 13, 2017.

Conclusion:

Thus, current target federal fund rate is 1.5%

b. Comparison of target federal fund rate.

The target federal fund rate of current Federal Open Market Committee (FOMC) statement is 1.5% on December 31, 2017 which was 1.25% on June 14, 2017.
Therefore, the target federal funds rate of current FOMC statement is different from the previous FOMC statement. So it differs by 0.25%.

Conclusion:

Thus, target federal fund rate differs by 0.25%.

c. Macroeconomic condition.

The macroeconomic condition of the U.S can be justified by the FOMC statement regarding federal fund rate. There is an increase in the economic activities of the U.S. and with this increase, the unemployment has decreased.
There is an increase in both consumption and investment. In the short run, the economy is growing and in the long run, inflation is expected.

Conclusion:

Thus, there is an increase in the economic activities of the U.S.

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Answer 4

Question

Chapter 19, Problem 1P

To determine

Concept Introduction:

Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Expert Solution & Answer

Explanation of Solution

a. Target Federal fund rate.

Target Federal fund rate is 1.5% on December 13, 2017.

Conclusion:

Thus, current target federal fund rate is 1.5%

b. Comparison of target federal fund rate.

The target federal fund rate of current Federal Open Market Committee (FOMC) statement is 1.5% on December 31, 2017 which was 1.25% on June 14, 2017.
Therefore, the target federal funds rate of current FOMC statement is different from the previous FOMC statement. So it differs by 0.25%.

Conclusion:

Thus, target federal fund rate differs by 0.25%.

c. Macroeconomic condition.

The macroeconomic condition of the U.S can be justified by the FOMC statement regarding federal fund rate. There is an increase in the economic activities of the U.S. and with this increase, the unemployment has decreased.
There is an increase in both consumption and investment. In the short run, the economy is growing and in the long run, inflation is expected.

Conclusion:

Thus, there is an increase in the economic activities of the U.S.

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Answer 5

Chapter 19, Problem 1P

To determine

Concept Introduction:

Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Expert Solution & Answer

Explanation of Solution

a. Target Federal fund rate.

Target Federal fund rate is 1.5% on December 13, 2017.

Conclusion:

Thus, current target federal fund rate is 1.5%

b. Comparison of target federal fund rate.

The target federal fund rate of current Federal Open Market Committee (FOMC) statement is 1.5% on December 31, 2017 which was 1.25% on June 14, 2017.
Therefore, the target federal funds rate of current FOMC statement is different from the previous FOMC statement. So it differs by 0.25%.

Conclusion:

Thus, target federal fund rate differs by 0.25%.

c. Macroeconomic condition.

The macroeconomic condition of the U.S can be justified by the FOMC statement regarding federal fund rate. There is an increase in the economic activities of the U.S. and with this increase, the unemployment has decreased.
There is an increase in both consumption and investment. In the short run, the economy is growing and in the long run, inflation is expected.

Conclusion:

Thus, there is an increase in the economic activities of the U.S.

Answer 6

Chapter 19, Problem 1P

To determine

Concept Introduction:

Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Expert Solution & Answer

Explanation of Solution

a. Target Federal fund rate.

Target Federal fund rate is 1.5% on December 13, 2017.

Conclusion:

Thus, current target federal fund rate is 1.5%

b. Comparison of target federal fund rate.

The target federal fund rate of current Federal Open Market Committee (FOMC) statement is 1.5% on December 31, 2017 which was 1.25% on June 14, 2017.
Therefore, the target federal funds rate of current FOMC statement is different from the previous FOMC statement. So it differs by 0.25%.

Conclusion:

Thus, target federal fund rate differs by 0.25%.

c. Macroeconomic condition.

The macroeconomic condition of the U.S can be justified by the FOMC statement regarding federal fund rate. There is an increase in the economic activities of the U.S. and with this increase, the unemployment has decreased.
There is an increase in both consumption and investment. In the short run, the economy is growing and in the long run, inflation is expected.

Conclusion:

Thus, there is an increase in the economic activities of the U.S.

Answer 7

Chapter 19, Problem 1P

To determine

Concept Introduction:

Federal Funds Rate: The federal fund rate affects the fiscal and the monetary policy of the U.S. The rate at which one bank lends to another bank for a short term basis is known as federal fund rate.

Answer 8

Expert Solution & Answer

Explanation of Solution

a. Target Federal fund rate.

Target Federal fund rate is 1.5% on December 13, 2017.

Conclusion:

Thus, current target federal fund rate is 1.5%

b. Comparison of target federal fund rate.

The target federal fund rate of current Federal Open Market Committee (FOMC) statement is 1.5% on December 31, 2017 which was 1.25% on June 14, 2017.
Therefore, the target federal funds rate of current FOMC statement is different from the previous FOMC statement. So it differs by 0.25%.

Conclusion:

Thus, target federal fund rate differs by 0.25%.

c. Macroeconomic condition.

The macroeconomic condition of the U.S can be justified by the FOMC statement regarding federal fund rate. There is an increase in the economic activities of the U.S. and with this increase, the unemployment has decreased.
There is an increase in both consumption and investment. In the short run, the economy is growing and in the long run, inflation is expected.

Conclusion:

Thus, there is an increase in the economic activities of the U.S.