Which of the following is true? The width of the federal funds target range is 50 basis points. If reserves are scarce (as was the case prior to the global financial crisis) and the Fed sells government bonds, then the federal funds rate will decrease. If the Fed decreases the interest it pays on banks' reserve balances, we may expect an increase in the federal funds rate. None of the other answers is correct
Which of the following is true? The width of the federal funds target range is 50 basis points. If reserves are scarce (as was the case prior to the global financial crisis) and the Fed sells government bonds, then the federal funds rate will decrease. If the Fed decreases the interest it pays on banks' reserve balances, we may expect an increase in the federal funds rate. None of the other answers is correct
Chapter19: Money Creation
Section: Chapter Questions
Problem 14SQ
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Which of the following is true?
The width of the federal funds target range is 50 basis points. |
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If reserves are scarce (as was the case prior to the global financial crisis) and the Fed sells government bonds, then the federal funds rate will decrease. |
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If the Fed decreases the interest it pays on banks' reserve balances, we may expect an increase in the federal funds rate. |
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None of the other answers is correct.
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