Question

What are the major differences between a discount loan and an open market purchase with respect...

What are the major differences between a discount loan and an open market purchase with respect to their respective effects on monetary base? Explain using an example and showing the relevant changes in the balance sheets of the Fed and the Banking System. Between these two actions, is one preferred to the other by the Fed? Why or why not?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
2. What is an open market sale? Suppose the Fed conducts an open market sale of...
2. What is an open market sale? Suppose the Fed conducts an open market sale of $5 million How does that affect the monetary base? Explain using the T-accounts for the Fed and the Banking System.
Please explain why QUESTION A discount loan by the Fed to a bank causes a(n) ________...
Please explain why QUESTION A discount loan by the Fed to a bank causes a(n) ________ in reserves in the banking system and a(n) ________ in the monetary base. A. increase; decrease B. decrease; decrease C. decrease; increase D. increase; increase
Which has a greater impact on monetary base an open market purchase of 10 million Turkish...
Which has a greater impact on monetary base an open market purchase of 10 million Turkish Lira or a discount loan of 10 million Turkish Lira?
51. Which statement about the Federal Open Market Committee is untrue? (a) the Secretary of Treasury...
51. Which statement about the Federal Open Market Committee is untrue? (a) the Secretary of Treasury always is a voting member of the Committee on monetary policy decisions; (b) the President of the New York Fed, by tradition, always is a voting member on policy matters; (c) the Committee formulates, but does not implement, monetary policy; (d) its policy decisions do not require a consensus among voting members. 52. An open market operation designed to add reserves to the banking...
1. When the U.S. dollar depreciates relative to other major currencies, what would happen to exports...
1. When the U.S. dollar depreciates relative to other major currencies, what would happen to exports and imports of goods and services from and to the United States? Is it good for domestic firms exporting goods and services? Is it good for domestic portfolio investors who may purchase foreign assets? 2. When the Federal Reserve conducts an expansionary monetary policy (increasing its monetary base), what would happen to the domestic money supply? Does this also affect the supply of dollar...
1) If the Federal Reserve conducts an open market purchase, we can expect that the short-run...
1) If the Federal Reserve conducts an open market purchase, we can expect that the short-run Phillips curve will shift left. the short-run Phillips curve will shift right. t here will be a movement to the right along the short-run Phillips curve. there will be a movement to the left along the short-run Phillips curve. the long-run Phillips curve will shift right. 2) In the long run, the Phillips Curve shows that the natural rate of unemployment is independent of...
1. Please define A, B, H, N, S shares in the Chinese stock market. 2. What...
1. Please define A, B, H, N, S shares in the Chinese stock market. 2. What is a volume of China’s interbank bond market in 2014 and 2015. 3. If you put ¥100 in a bank, how much will it be worth in 10 years? Suppose the interest rate is constant at 4%. 4. Suppose you will receive 1000 Yuan in 5 years, what is the present value of this 1000 Yuan if the interest rate is constant at 5%?...
Topic: Open Market Supply SHANGHAI -- Money markets are often described as the financial system's plumbing....
Topic: Open Market Supply SHANGHAI -- Money markets are often described as the financial system's plumbing. When they work, which is most of the time, hardly anyone notices, but when they get blocked up, it creates quite a stink. That is why China's money market -- in which banks and other financial institutions borrowed some $6.4 trillion from each other last month alone to fund their daily needs -- is becoming one of the world's most important markets to watch....
Please read the article and answer these questions. Thanks. Article: TESTING THE GLOBAL CENTRAL BANK SWAP...
Please read the article and answer these questions. Thanks. Article: TESTING THE GLOBAL CENTRAL BANK SWAP NETWORK In the last few weeks, the ECB has been drawing on its liquidity swap line with the Fed, first $308 million for a week, then $658 million for a week, and last week back down to $358 million. What’s that about? It’s not such a large amount. Bank of Japan borrowed more in the past, $810 million in March and $1528 million in...
Can I have your opinion on this research and possible correction? The global economy and government’s...
Can I have your opinion on this research and possible correction? The global economy and government’s ability to control its country’s currency. Definition of terms Global economy is an economic interdependence established between the most influential countries that drives the worldwide economic environment. It is also the aggregate economic output, movement and influence of all countries. (My Accounting course). Currency is the medium of exchange for goods and services. In short, its money, in the form of paper or coins,...