28) If the banking system has a large amount of reserves, many banks will have e
ID: 1109845 • Letter: 2
Question
28) If the banking system has a large amount of reserves, many banks will have excess reserves to lend and the federal funds rate will probably ________; if the level of reserves is low, few banks will have excess reserves to lend and the federal funds rate will probably ________.
A) rise; fall B) fall; rise C) fall; fall D) rise; rise
29) When the Fed wants to raise interest rates after banks have accumulated large amounts of excess reserves, it would
A) conduct massive open market purchase.
B) increase the interest rate paid on excess reserves.
C) increase the required reserve ratio.
D) increase discount rate.
30) Suppose on any given day the prevailing equilibrium federal funds rate is above the Federal Reserve's federal funds target rate. If the Federal Reserve wishes for the federal funds rate to be at their target level, then the appropriate action for the Federal Reserve to take is a ________ open market ________, everything else held constant.
A) defensive; sale B) defensive; purchase C) dynamic; purchase D) dynamic; sale
Explanation / Answer
28. If the banking system has a large amount of reserves, many banks will have excess reserves to lend and the federal funds rate will probably _fall_______; if the level of reserves is low, few banks will have excess reserves to lend and the federal funds rate will probably ___rise_____.
29. When the Fed wants to raise interest rates after banks have accumulated large amounts of excess reserves, it would B) increase the interest rate paid on excess reserves
30. Suppose on any given day the prevailing equilibrium federal funds rate is above the Federal Reserve's federal funds target rate. If the Federal Reserve wishes for the federal funds rate to be at their target level, then the appropriate action for the Federal Reserve to take is a ____dynamic____ open market ___purchase_____, everything else held constant.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.