How much will the quantity of federal funds have to change

Assignment Help Business Economics

Reference no: EM13156629

Suppose that the demand for federal funds curve is such that the quantity of funds demanded changes by $120 billion for each 1 precent change in federal funds interest rate. Also, assume that the current Federal funds rate is at the 3 precent rate that is targeted by the Fed. Now suppose that the Fed retargets the rate to 3.5 precent. Assuming no change in demand, will the Fed need to increase or decrease the supply of Federal funds? By how much will the quantity of Federal funds have to change for the equilibrium to occur at new target rate?

Reference no: EM13156629

Questions Cloud

What will be the macroeconomic result : Suppose that full-employment (and full-capacity) output in an economy is $200. If Ca is $150, lg is $50, Xn is -$10, and G is $30, what will be the macroeconomic result?

Discuss both theoretical and practical reason for protecting : Biodiversity hotspots are almost universally supported by scientists as places deserving immediate and substantial protection.

Income for six year statute of limitations : What amount must be omitted from income for the six year statute of limitations apply:

Acceptable levels of cohesion and adaptability : Identify a family from a television series/movie or literary work. Demonstrate the acceptable levels of cohesion and adaptability within that system and note tensions as members struggle with these levels.

How much will the quantity of federal funds have to change : Assuming no change in demand, will the Fed need to increase or decrease the supply of Federal funds? By how much will the quantity of Federal funds have to change for the equilibrium to occur at new target rate?

Determine the mass of citric acid produced : Citric acid (H3C6H5O7) is a product of the fermentation of sucrose (C12H22O11) in air. C12H22O11(aq) + 3 O2(g) -> 2 H3C6H5O7(aq) + 3 H2O(l) Determine the mass of citric acid produced when 4.60 mol C12H22O11 is used.

Describe a given ecosystem whose species richness : Describe a given ecosystem whose species richness is currently under threat. You may pick a well-known area or a local area that is of personal interest.

The eventual change in gdp will be : A major industrial firm decides to spend $2,000,000 to purchase new machines for a factory. If the marginal propensity to consume is 0.8, the eventual change in GDP will be?

Find critical value to find grade distribution is different : The following number of grades were recorded. Find the critical value to determine if the grade distribution for the department is different than expected. Use α = 0.01.

User Account

All Pages