A central bank carries out a contractionary open market operation *Another way of achieving the same thing as in an open market operation is to change the banks’ refinancing rate. Explain carefully in which direction this rate would have to change in order to achieve the same effect as the aforementioned contractionary open market operation, and how the banks’ reaction to this change brings about this effect
A central bank carries out a contractionary open market operation *Another way of achieving the same thing as in an open market operation is to change the banks’ refinancing rate. Explain carefully in which direction this rate would have to change in order to achieve the same effect as the aforementioned contractionary open market operation, and how the banks’ reaction to this change brings about this effect
Chapter13: The Federal Reserve System
Section: Chapter Questions
Problem 11QP
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A central bank carries out a contractionary open market operation
*Another way of achieving the same thing as in an open market operation is to change
the banks’ refinancing rate. Explain carefully in which direction this rate would have to
change in order to achieve the same effect as the aforementioned contractionary open
market operation, and how the banks’ reaction to this change brings about this effect
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