The federal funds rate can never be below the interest rate paid on reserves. Is this statement true, false, or uncertain? Explain your answer.

Q: Which of the following is true?     The width of the federal funds target range is 50 basis…

A: The current federal funds rate is 0.50 % - 0.25 %. There is 25 basis point difference between…

Q: In the market for reserves that determines the federal funds rate (FFR), suppose the initial FFR…

A: The federal funds market is the opportunity for the banks that have excess reserves can lend to…

Q: Explain why the interest rate on excess reserves serves as the lower bound for the market fed funds…

A:

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: Distinguish between the Federal funds rate and the prime interest rate. Why is one higher than the…

A: Federal funds are overnight lending among banking institutions in order to retain the central bank…

Q: Suppose the reserve ratio is 10%. If the Fed wants to derease the money supply by $10 million, what…

A: Given  Reserve Ratio = 10% Reserve Ratio = 0.10 Decrease in money supply = $10 million

Q: Why did the Fed switch from increasing Federal Reserve target rates from Dec 2015 to Dec 2018 to…

A: Fed increases the rates from Dec 2015 to Dec 2018 because of the excess liquidity in the market. The…

Q: If the Fed has decided to change the federal funds rate target, the main interest rate they use to…

A: The Federal Reserve System, also known as the Fed is the Central Bank of the United States. It…

Q: How do monetary financial institutions create liquidity, pool risk, lower the cost of borrowing, and…

A: The monetary financial institutions such as banks, insurance companies, mutual funds, non-banking…

Q: Discuss ways in which the federal reserve manages its' two key interest rates.

A: Answer in step 2.

Q: The Federal Funds Market is actually monitored and manipulated by the Federal Reserve, but…

A: The Fed conducts the open market operations to sell and buy securities which can be bought and sold…

Q: How is it that this expansionary monetary policy could actually lead to an increase in savings?…

A: The answer is as follows:,-

Q: How does the Federal reserve Bank "influence" interest rates to meet the objectives of the Fed?

A: The first tool that is used by the Fed to meet the objectives is to manipulate short-term interest…

Q: If the Federal reserve decides to reduce the money supply through open market operations, then the…

A: If the Federal reserve decides to reduce the money supply through open market operations, it will do…

Q: “The federal funds rate can never be above the discountrate.” Is this statement true, false, or…

A: True The federal fund rates can never be above the discount rate as in this transaction market, the…

Q: Define the Federal Funds Rate. What is the current Federal Funds Rate? Define the Federal Reserve…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: The graph to the right ilustrates how the Fed uses discounting to keep the federal funds rate from…

A: In the given diagram of Federal funds rate, the supply of reserves is represented by upside L shaped…

Q: Draw a diagram of the market for bank reserves and show a situation in which there is excess demand…

A: Suppose the demand for foreign exchange is greater than the supply of foreign exchange there will be…

Q: are open market operations the most important tool that the Fed has to help stabilize the economy?

A: Monetary policy: Monetary policy is the tool in the hands of the central bank of a country which…

Q: If lines of credit and other off-balance-sheet activities do not, by definition, appear on the…

A:

Q: the supply and demand analysis of the market for reserves, indicate what happens to the federal…

A: Non-borrowed Reserve: Non-borrowed reserve is bank reserve that a bank holds in cash that are its…

Q: The Federal Funds Rate is: ​A. A short-term nominal interest rate ​B. A short-term real interest…

A: When one bank borrows loan from another overnight to meet the needs of the reserve requirement they…

Q: Following the Great Recession, the Federal Reserve adopted a restrictive reserve policy.   true…

A: Following the Great Recession, the Federal Reserve adopted a restrictive reserve policy. This…

Q: Describe the functions of the federal reserve system. What is its number one function from a policy…

A: The federal reserve is the central bank of the United States (US). The central bank is the apex bank…

Q: “The only way that the Fed can affect the level of borrowed reserves is by adjusting the discount…

A: The Fed can change or alter the discount rate in order to encourage or discourage banks to borrow…

Q: What is the likely outcome if the Fed seeks to maintain a federal funds rate of 0% even when the…

A: The Fed or the central bank of the nation use various monetary tools for the proper functioning of…

Q: When the central bank of Guilder sells bonds, which of the following will occur?

A: Bonds are loans that are paid off in the future and accumulate interest.

Q: If there is a recession, the Fed would most likely encourage banks to provide loans by: a. buying…

A: Recession is described as the period in the economy in which the level of output falls. In such a…

Q: as the federal  funds rate rises, the banks; opportunity cost of holding excess reserves fall? true…

A: Federal funds rate: These are excess reserves that the commercial banks and other financial…

Q: ​Banks want to hold as little cash as possible because holding cash   a. provides very little…

A: Banks will not be willing to hold cash because it do not earn any interest.

Q: Can the Fed choose to target both the nonborrowed reserves and the federal funds rate at the same…

A: Non-borrowed reserves are the funds that a financial institution has of its own in cash without…

Q: There are three transactions a bank can make to increase leverage. Explain each type of transaction…

A: Balance sheet can be balanced when  ASSETS = LIABILITIES+ CAPITAL Balance sheet can be defined as…

Q: How could higher deposit insurance premiums forbanks with riskier assets benefit the economy?

A: Insurance premium is the money charged by the insurance company from the insured person or business…