Reserve requirement and interest rate

Related BrainMass Solutions

• Monetary Policy Questions and Answers

  If the reserve requirement before the shift was 10% and the Fed adjusted the reserve requirement to cause the shift, which of the following is a possible new value of the reserve requirement? 9.75%.

• Price level and real output

  The Federal Reserve uses open market operations, changes in the the reserve requirement, and changes in the discount rate to change the money supply. Open market operations are the primary tool of the Federal Reserve, and is quite powerful.

• Macroeconomic Principles and Policy

  The Federal Reserve uses open market operations, changes in the the reserve requirement, and changes in the discount rate to change the money supply. Open market operations are the primary tool of the Federal Reserve, and is quite powerful.

• Federal Reserve Policy

  Explain why and the benefits/drawbacks of this strategy. The Federal Reserve uses open market operations, changes in the the reserve requirement, and changes in the discount rate to change the money supply.

• Economics in a Global Environment

  the reserve requirement, and changes in the discount rate to adjust the money supply.

• Effect on short-term interest rates of Fed selling bonds

  161056 Effect on short-term interest rates of Fed selling bonds If the Federal Reserve sells government bonds, will short-term interest rates increase or decrease? Explain how this will affect aggregate demand and the rate of growth of the economy.

• tools of monetary policy

  Lower reserve requirement increases the money multiplier and hence increases the impact of a small change in money supply.

• How Money is Created

  The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements.

• What does the Federal Reserve Board do to combat inflation when the economy is bad?

  The fed funds rate, effective rate of interest, is the daily average rate of interest costs as negotiated between the commercial banks through the Federal Reserve System.