Questions from Financial Markets

Q: In what ways can the regional Federal Reserve banks influence the conduct

In what ways can the regional Federal Reserve banks influence the conduct of monetary policy?

Q: Which entities in the Federal Reserve System control the discount rate?

Which entities in the Federal Reserve System control the discount rate? Reserve requirements? Open market operations?

Q: If the required reserve ratio is 10%, how much of a

If the required reserve ratio is 10%, how much of a new $10,000 deposit can a bank lend? What is the potential impact on the money supply?

Q: The trading desk at the Federal Reserve sold $100,000

The trading desk at the Federal Reserve sold $100,000,000 in T-bills to the public. If the current reserve requirement is 8.0%, how much could the money supply change?

Q: Estimates of unemployment for the upcoming year have been developed as follows

Estimates of unemployment for the upcoming year have been developed as follows: What is the expected unemployment rate? The standard deviation?

Q: The Federal Reserve wants to increase the supply of reserves, so

The Federal Reserve wants to increase the supply of reserves, so it purchases 1 million dollars’ worth of bonds from primary dealers. Show the effect of this open market operation using T-accounts.

Q: Use T-accounts to show the effect of the Federal Reserve

Use T-accounts to show the effect of the Federal Reserve being paid back a $500,000 discount loan from a bank.

Q: The short-term nominal interest rate is 5%, with an

The short-term nominal interest rate is 5%, with an expected inflation of 2%. Economists forecast that next year’s nominal rate will increase by 100 basis points, but inflation will fall to 1.5%. What...

Q: A bank currently holds $150,000 in excess reserves.

A bank currently holds $150,000 in excess reserves. If the current reserve requirement is 12.5%, how much could the money supply change? How could this happen?

Q: Why might you be willing to make a loan to your neighbor

Why might you be willing to make a loan to your neighbor by putting funds in a savings account earning a 5% interest rate at the bank and having the bank lend her the funds at a 10% interest rate rath...