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27) During the 2008 recession, the Federal funds "Discount" rate was set by the Fed at a record low of 0.25%. In the same year, inflation was 3.85%. According to the relationship between real interest rates, nominal rates and inflation (the Fisher effect) this meant that per every $100 that a) banks lent out to customers, they had to return $385 in profits. b) the US Treasury got in loans, c) the Fed got from the US Government, $25 in payments $25 in nominal terms $96.4 in real term $0.25 in real terms. d) banks borrowed from the Fed to put in their reserves, e) banks borrowed from the Fed to put in their reserves,

27) During the 2008 recession, the Federal funds "Discount" rate was set by the Fed at a record low of 0.25%. In the same year, inflation was 3.85%. According to the relationship between real interest rates, nominal rates and inflation (the Fisher effect) this meant that per every $100 that a) banks lent out to customers, they had to return $385 in profits. b) the US Treasury got in loans, c) the Fed got from the US Government, $25 in payments $25 in nominal terms $96.4 in real term $0.25 in real terms. d) banks borrowed from the Fed to put in their reserves, e) banks borrowed from the Fed to put in their reserves,

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: Money Growth And Intlation
Section: Chapter Questions
Problem 6CQQ
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27) During the 2008 reqession, the Federal funds "Discount" rate was set by the Fed at a record low of 0.25%. In the same year, inflation was 3.85%. According to the relationship between real interest rates, nominal rates and inflation (the Fisher effect) this meant that per every $100 that they had to return $385 in profits. a) banks lent out to customers, b) the US Treasury got in loans, * $25 in payments $25 in nominal terms $96.4 in real term $0.25 in real terms. c) the Fed got from the US Government, d) banks borrowed from the Fed to put in their reserves, e) banks borrowed from the Fed to put in their reserves,
Transcribed Image Text:27) During the 2008 reqession, the Federal funds "Discount" rate was set by the Fed at a record low of 0.25%. In the same year, inflation was 3.85%. According to the relationship between real interest rates, nominal rates and inflation (the Fisher effect) this meant that per every $100 that they had to return $385 in profits. a) banks lent out to customers, b) the US Treasury got in loans, * $25 in payments $25 in nominal terms $96.4 in real term $0.25 in real terms. c) the Fed got from the US Government, d) banks borrowed from the Fed to put in their reserves, e) banks borrowed from the Fed to put in their reserves,
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