Show what will happen if the economy booms

Assignment Help Microeconomics
Reference no: EM131776490

Question: For each of the following, draw a supply and demand diagram for the overnight interest rate. Also, provide a brief written explanation of your answer and what will happen to the overnight interest rate.

a) Currently the equilibrium overnight rate is 4% and there is $0B in borrowed reserves. The rate the Central Bank charges for overnight loans is 5% and pays 4% for reserves. Show what will happen if the economy booms.

b) Currently the equilibrium overnight rate is 3% and there is $0B in borrowed reserves. The rate the Central Bank charges for overnight loans is 3% and it pays 3% on reserves. Show what will happen if the Fed sells bonds to banks.

c) Currently the equilibrium overnight rate is 4% and there is $0B in borrowed reserves. The rate the Central Bank charges for overnight loans is 5%. The Central Bank also pays 3% on any deposits banks keep at the Central Bank Show what will happen if the economy enters into recession.

Reference no: EM131776490

Questions Cloud

Explain how information technology : Explain how information technology (IT) contributes to high performance teams and learning organizations.
What is the yield to maturity : Kaufman Enterprise has bonds outstanding with a $1,000 face value and 10 years left until maturity. What is the yield to maturity
How social and environmental factors impact human behavior : Describe how social and environmental factors impact human behavior. Describe two-three causes of death related to human behavior.
Discuss what are gross income and exclusions : John received $100,000 cash from his company for his good work performance and he alsoreceived stock shares worth $200,000 from his
Show what will happen if the economy booms : Currently the equilibrium overnight rate is 4% and there is $0B in borrowed reserves. The rate the Central Bank charges for overnight loans is 5% and pays 4%.
Chronicler of early roman times : What Roman historian is the best known chronicler of early Roman times? What is the name of the work?
What was the european response to american films : What was the European response to American films in the 1930s and 1940s? How do they see our product now?
Calculate the accounting rate of return on this investment : Calculate the accounting rate of return on this investment for the first year. Assume straight-line depreciation
What are advantage and disadvantage of performance-based pay : What are the advantages and disadvantages of performance-based pay? Explain why employees in an organization should or should not earn pay based on performance.

Reviews

Write a Review

Microeconomics Questions & Answers

  How projected global and market trends over the next years

Explanation of how projected global and market trends over the next 10-15 years will impact your company's ability to maintain a competitive advantage.

  Explain the three different types of elasticity of demand

Explain the 3 different types of elasticity of demand. Use supply and demand analysis to illustrate the effects of a specific or per unit tax on consumers and producers of petrol.

  What is the money supply as a result

What is the money supply as a result

  What type of security features will your hotel have

What type of security features will your hotel have? Select specific amenities that will help distinguish your hotel's brand. What type of management organization will your hotel possess?

  What is the consumer price index cpi how is it measured

What is the consumer price index (CPI)? How is it measured? What are the pros and cons of using the CPI as a measure of the cost of living?

  Describe the balance of trade

Describe the balance of trade. What factors contribute to our trade deficit?

  How might four ps be adjusted as result of social class

How should social class influences affect the planning of a new restaurant in a large city How might the four Ps be adjusted as a result of social class influences

  Which of the given is not among the functions of contract

Which of the following is not among the functions of contract? When manufacturers and distributors establish credible commitments to one another, they often employ?

  Define trade between canada and mexico of tariffs

Before 1995, trade between Canada and Mexico was subject to tariffs. In 1995, Mexico joined NAFTA and all Canadian and Mexican tariffs have gradually.

  Evaluate the legal risks associated with all property rights

Evaluate the legal risks associated with all property rights, domestically and internationally for your business. Identify and protect tangible property rights.

  Graph of the production possibilities frontiers

What is the graph of the production possibilities frontiers for the American and Japanese economies if American worker can produce 10 tons of grain a year and Japanese worker can produce 5 tons a year?

  Price elasticity of supply you have based on cost of

price elasticity of supply you have based on the cost of production changes as output changes including actual

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