What will the NY Fed Open Market Desk likely do if this is what the federal fund

Question

What will the NY Fed Open Market Desk likely do if this is what the federal funds market looks like? Answer in the space below and then show the effect of its action on the graph, if applicable. What will the NY Fed Open Market Desk likely do if this is what the federal funds market looks like? Answer in the space below and then show the effect of its action on the graph, if applicable. What will the NY Fed Open Market Desk likely do if this is what the federal funds market looks like? Answer in the space below and then show the effect of its action on the graph, if applicable.

Explanation / Answer

Ans8: Here, ff target level is above the ff1 means to reach the target supply has to be increased. It will create inflation in the economy as supply of fund is increasing. This will lower down the interest rate

Ans9: Here. ff1 and ff target are equal to each other so there is no need to change as desired level is already here.

Ans10: Here ff target is below the ff1, means to achieve this level supply has to be decreased. The effect of this, will fetch out the excess fund in the economy. This will raise the interest rate.

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