Put the following in order: a) The Federal Reserve is concerned about rising inf
ID: 1107123 • Letter: P
Question
Put the following in order:
a) The Federal Reserve is concerned about rising inflation.
b) Banks begin calling the fed funds dealer, most of which are requesting loans in the overnight fed funds market.
c) Aggregate demand falls.
d) The NY Fed sells bonds.
e) Banks find their total reserves decreasing.
f) The FOMC directive is to sell bonds in open market operations.
g) Inflation decreases.
h) Prime interest rates and other rates also rise.
i) The NY Fed trading desk calls several brokers asking for rates.
j) Fed funds dealers raise the fed funds rate.
k) Investment and consumption fall.
Explanation / Answer
a) The Federal Reserve is concerned about rising inflation.
f) The FOMC directive is to sell bonds in open market operations.
d) The NY Fed sells bonds.
i) The NY Fed trading desk calls several brokers asking for rates.
b) Banks begin calling the fed funds dealer, most of which are requesting loans in the overnight fed funds market.
j) Fed funds dealers raise the fed funds rate.
e) Banks find their total reserves decreasing.
h) Prime interest rates and other rates also rise.
k) Investment and consumption fall.
c) Aggregate demand falls.
g) Inflation decreases.
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