Use a demand and supply graph

Assignment Help Financial Management

Reference no: EM131303042

The January 22, 2008, press release of the Federal Open Market Committee (FOMC) states that the FOMC "decided to lower its target for the federal funds rate by 75 basis points to 31 ⁄2 percent." The press release goes on to say that "In a related action the Board of Governors approved a 75-basis point decrease in the discount rate to 4 percent."

a. Use a demand and supply graph for the federal funds market to show the equilibrium federal funds rate and the discount rate before the policy action of January 22, 2008, when the federal funds rate was 41 ⁄4% and the discount rate 43 ⁄4%.

b. Use your graph to show how the Fed would lower the federal funds rate by 75 basis points (3 ⁄4%). Show in your graph the 75-basis point increase in the discount rate. What policy action would the Fed use to lower the federal funds rate by 75 basis points?

Reference no: EM131303042

Questions Cloud

Analyze the effect of an open market sale : Use a demand and supply graph for the federal funds market to analyze the effect of an open market sale of Treasury securities on the equilibrium federal funds rate.

How us government policies and including fiscal policies : Discuss how specific U.S. government policies, including fiscal policies and trade policies, can influence economic growth. Provide a specific, real-world example of a U.S. fiscal or trade policy.

Show the equilibrium federal funds rate : Using a demand and supply graph for the federal funds market, show the equilibrium federal funds rate and the discount rate before the policy action of December 13, 2005.

Utilization management may change in the future : Discuss how utilization management may change in the future. Consider the following questions in your response:

Use a demand and supply graph : Use a demand and supply graph for the federal funds market to show the equilibrium federal funds rate and the discount rate before the policy action of January 22, 2008.

What is the expected value under perfect information : Which alternative should be chosen based on the minimax regret criterion - what is the expected value under perfect information (EVPI)?

Define policy directive account manager and trading desk : How does an open market sale of Treasury securities by the Fed affect the price of Treasury securities, the yield on Treasury securities, the monetary base, and the money supply?

Convincing or presented the most useful information : Which of these four authors was the most convincing or presented the most useful information? Explain your reasoning as to why you found this author more convincing that the others.

Explain the competitive environment within the industry : From the firms' point of view, what are some of the incentives to consolidate? Describe the competitive environment within the industry.

User Account

All Pages