Question

Holding everything else constant, if the federal funds rate rises, then the demand for A visual...

Holding everything else constant, if the federal funds rate rises, then the demand for
A visual representation would really help!
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Excess reserves falls because they have a higher cost.

.

Other than above:

.
Borrowing cost rises

Money supply in market decreases

Cost of funds increases


By increasing federal funds rate fed reduces the overall supply of the money in market

Effect of Higher fed rates > Low borrowings > Higher cost for keeping funds > Lower income for banks due to lesser borrowing > Lower Growth rate overall

(I am using mobile to answer hence, representing the effect of higher fed rates results so and so... Hope that helps)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In the market for reserves, if the federal funds rate is between the discount rate and...
In the market for reserves, if the federal funds rate is between the discount rate and the interest rate paid on excess reserves, an increase in the reserve requirement ________ the demand of reserves and causes the federal funds interest rate to ________, everything else held constant.
Holding everything else constant, put options are more expensive in periods of low interest rates. True...
Holding everything else constant, put options are more expensive in periods of low interest rates. True False
1. Holding everything else constant, the multiplier effect of a $100 tax cut : a)is the...
1. Holding everything else constant, the multiplier effect of a $100 tax cut : a)is the same as the multiplier effect of a $100 increase in G. b)is smaller than the multiplier effect of a $100 increase in G. c)is larger than the multiplier effect of a $100 increase in G. d)may be smaller than, larger than, or equal to the multiplier effect of a $100 increase in G. 2. When the government borrows funds in financial markets to pay...
1. Suppose the economy is producing at potential output. Everything else held constant, if the central...
1. Suppose the economy is producing at potential output. Everything else held constant, if the central bank wants to permanently decrease the inflation rate, it needs to _____ the real interest rate _____. Select one: a. lower; permanently b. lower; temporarily c. raise; temporarily d. raise; permanently 2. Noise traders Select one: a. trade only when they have inside information. b. tend to lose money on stock trades, but help to stabilize the market. c. tend to make higher returns...
Holding everything else constant, increasing sample size __________. a. decreases standard error b. increases the magnitude...
Holding everything else constant, increasing sample size __________. a. decreases standard error b. increases the magnitude of the t statistic c. increases degrees of freedom d. All of the other options are consequences of increasing sample size.
Given everything else is constant how does different time to maturity affect the duration of a...
Given everything else is constant how does different time to maturity affect the duration of a bond? Given everything else is constant how does different coupon rate or bond yield affect the price of a bond?
You are given the following information about the market for reserves. The current federal funds rate...
You are given the following information about the market for reserves. The current federal funds rate is 1.5%, the discount rate is 1.75%, the interest rate paid on reserves is 1.25%, and the Fed owns $350 billion in government securities. Are there any discount loans outstanding? Why or why not? Suppose the increase in economic activity meant that banks started to increase their lending to businesses. Banks are making loans rather than holding extra cash. Select all that apply. Question...
Everything else held constant, the yield-to-maturity (YTM) of a bond __________. will equal the coupon rate...
Everything else held constant, the yield-to-maturity (YTM) of a bond __________. will equal the coupon rate if the bond sells at par value will decrease if the price of the bond increases A and B are both correct will be lower than the coupon rate if the bond sells below par value
Everything else held constant, if the Fed unexpectedly announces that it is worried about the economy...
Everything else held constant, if the Fed unexpectedly announces that it is worried about the economy potentially falling into a recession , you would expect stock prices to _____. A. remain constant B. Increase C. Either increase, decrease, or remain constant D. Decrease 2. Suppose you own a call option for one share of AT&T stock with a strike price of $50 and that you purchased it for $10. Assume that, on the expiration date, the price of AT&T stock...
1. Everything else held constant, if the Fed unexpectedly announces that it is worried about the...
1. Everything else held constant, if the Fed unexpectedly announces that it is worried about the economy potentially falling into a recession , you would expect stock prices to _____. A. remain constant B. Increase C. Either increase, decrease, or remain constant D. Decrease 2. Suppose you own a call option for one share of AT&T stock with a strike price of $50 and that you purchased it for $10. Assume that, on the expiration date, the price of AT&T...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT