Forward commitment eliminates flexibility in monetary policy

Assignment Help Microeconomics
Reference no: EM13696016

Forward commitment by the Fed has which of the following impacts?

Forward commitment creates moral hazard in lending, as banks know that the Fed will continue to pump reserves into the system.

Forward commitment encourages lending because banks do not fear that the Fed will suddenly reverse the policy.

Forward commitment eliminates all flexibility in monetary policy.

Forward commitment encourages excessive lending as banks try to take control of as many reserves as possible before the policy is exhausted.

Reference no: EM13696016

Questions Cloud

Lowest quintile of households in the income distribution : The lowest quintile of households in the income distribution receives about:
Suppose there are two demand curves : Suppose there are two demand curves, one is flat (elastic) and the other steep (inelastic). Which one would be the demand for water, the flatter one or steeper one and why?
Investment includes spending on : Investment includes spending on
According to classical economists-involuntary unemployment : According to Classical economists, involuntary unemployment
Forward commitment eliminates flexibility in monetary policy : Forward commitment by the Fed has which of the following impacts? Forward commitment creates moral hazard in lending, as banks know that the Fed will continue to pump reserves into the system. Forward commitment encourages lending because banks do no..
Profitable firm be even more inviting for corporate takeover : The threat of a corporate takeover will help prevent lazy monopolist behavior and lead managers to run more efficient, more profitable firms in order to prevent being taken over. Wouldn't a more efficient more profitable firm be even more inviting fo..
Break even cost of money between these two projects : An old covered bridge can be strengthened at a cost of $9000, or can be replaced for $40,000. The present salvage value of the old bridge is $13,000. With reinforcements, it will last for an additional 20 years with $500 annual maintenance and have a..
Keynesian-classical economics is their view of equilibrium : One of the fundamental differences between Keynesian and Classical economics is their view of equilibrium in the macro economy.
Supply-side inflation is caused by : Supply-side inflation is caused by

Reviews

Write a Review

Microeconomics Questions & Answers

  The mc of coffee is 10 the mc of a banana is 40 is bundling

at a student cafeacute there are equal numbers of two types of customers with the following values. the cafeacute owner

  In what respects are the following common practices subtle

complete this essay in a microsoft word document with a minimum of 250 words apa formattedin what respects are the

  Financial institutions in the global economy

Describe the roles of financial institutions in the global economy and discuss how the financial services industry is likely to change over next decade.

  Create less worry about the social security system

What condition would create less worry about the Social Security system?

  Research and explain how economic theory concerning

research and discuss how the economic theory concerning decisions in the face of imperfect knowledge affects demand for

  Find gdp at market price

In a closed economy $10,000 is to be spent anually on the maintenance of existing capital stock,while the factor cost of final goods producing during the year=65k $. Producers pay 10k by the way of production. Find GDP at market price.

  Firm demand for labour curve

Assume a firm's production function is given by Q = 12L - L^2 for L = 0 to 6, where L is labour input per day and Q is output per day. Derive and draw the firm's demand for labour curve if output sells for $10 in competitive market.

  Given the information above find the best estimate of how

suppose that the reserve requirement ratio is 5 and that the fed uses open market operations by selling 100 million

  Write down the profit-maximizing price and output levels

roberts new way vacuum cleaner company is a newly started small business that produces vacuum cleaners and belongs to a

  How can market share be instrumental in deciding on capital

you have been part of the orthopedic center for 5 years. in that time you have seen the center grow and the need for

  Discover the government budget deficit or surplus

Discover the government budget deficit or surplus. Compute the Equilibrium level (Y) Compute the equilibrium level of disposable Income (Yd). Compute the level of Consumption (C) in equilibrium.

  In order to answer the questions you will have to analyse

in order to answer the questions you will have to analyse the datasetattached via usinggretl or other statistic

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd