Will the fed need to increase or decrease the supply

Assignment Help Econometrics
Reference no: EM13209386

Suppose that the demand for Federal funds curve is such that the quantity of funds demanded changes by $120 billion for each 1 percent change in the Federal funds interest rate. Also, assume that the current Federal funds rate is at the 3 percent rate that is targeted by the Fed. Now suppose that the Fed re-targets the rate to 3.5 percent.

Assuming no change in demand, will the Fed need to increase or decrease the supply of Federal funds? Increase the supply of Federal funds 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 the new target rate?

Reference no: EM13209386

Questions Cloud

Evaluation of strength of each of five competitive forces : What is the evaluation of the strength of each of the five competitive forces (very strong, strong, moderate, or weak?
How to calculate the growth rate of the variable : claimed that if z+x/y, then g(z) = g(x)-g(y), where g(.) represent the growth rate of the variable in question. Prove this result in a formal way using two methods. First, repeat the method that we used in class to prove that if z = xy, then g(z)=g..
Global trade patterns changed from 1750 to present : Choose TWO of the areas listed below and analyze how each area’s relationship to global trade patterns changed from 1750 to present. Be sure to describe each area’s involvement in global patterns around 1750 as your starting point.
Explain what is the empirical formula for the hydrocarbon : Complete combustion of 3.90 g of a hydrocarbon produced 12.0 g of CO2 and 5.54 g of H2O. What is the empirical formula for the hydrocarbon?
Will the fed need to increase or decrease the supply : Suppose that the demand for Federal funds curve is such that the quantity of funds demanded changes by $120 billion for each 1 percent change in the Federal funds interest rate. Also, assume that the current Federal funds rate is at the 3 percent ..
Compute the molar mass of the compound : CCl4 lowered the freezing point of the solvent by 5.40 K . Calculate the molar mass of the compound.
Compute themolarity and molarity of sucrose : The mass density of the resulting solution was 1040 kg/m^3. Calculate themolarity and molarity of sucrose in the solution.
Define what is the empirical formula of the unknown compound : An unknown compound contains only C, H, and O. Combustion of 3.60 g of this compound produced 8.18 g of CO2 and 3.35 g of H2O.
Statements regarding carbon dioxide : Which of the following statements regarding carbon dioxide is true?

Reviews

Write a Review

Econometrics Questions & Answers

  What does the budget set of milk look like

The price of milk at the supermarket is px = 4$/liter. The price of cereal py is 0.2cents/gram. If supermarket allows Bob to use an unlimited number of coupons. Coupon: "Buy 1 liter of milk and get 1 box of cereal for free". A box of cereal has 20..

  Why firms collude to form a cartel

Consider a market with the market demand D: P = 80 - Q, which is served by four Cournot oligopolistic producers (firms) with the constant marginal cost MC = $30 and no fixed cost.When these four firms collude to form a cartel (they behave like a mo..

  Compute the geometric mean rate of return

The prices of five computer stocks increased by 37.2 percent, 1,140.0 percent, 2.7 percent, 842.0 percent and 0.95 percent, respectively since 1990.

  Market equilibrium price and quantity for beer case

Assume the demand function and the supply functions for 24-can beer case in Houston are: Demand: QD = 1,000 ? 50P Demand: QS = 40P + 100 (a) What are the market equilibrium price and quantity for beer case?

  Setup a two-variable regression model

Setup a two-variable regression model (i.e. write down the PRF) to examine the impact of per capita disposable income on real per capita gasoline expenditures.

  Which person has comparative advantage in chicken

Suppose that they are thinking of each specializing completely in the area in which they have a comparative advantage, and then trading at a rate of 2.5 pounds of potatoes for 1 chicken, would they each be better off. Which person has comparative ..

  Conclude modification reduced the number of traffic accident

were chosen at random, and the traffic lights of those intersections were modified. The numbers of minor accidents during a six-month period before and after the modifications were: NUMBER OF ACCIDENTS

  What are marshallian-market demand functions

Consumer 1 has expenditure function e1(p1; p2; u1) = u1sqrt(p1p2) and consumer 2 has utility function v(x1; x2) =x1x2^(alpha) What are Marshallian (market) demand functions for each of the goods by each of the consumers

  Find the aw for the process

A certain service can be performed satisfactorily by process R, which has a capital investment cost of $8,000, an estimated life of 10 years, no market value at the end of 10 year life, and annual net receipts (revenues-expenses) of $2,400 per yea..

  What is the current profits of the two firms

Inverse demand function is P = 10-2Q (in millions) Firm 1 has a marginal cost of $2 and Firm 2 has a marginal cost of $6. Current market price is $8 - each firm has 50 percent of the market and each firm has to pay one year's rent of $1 million.

  What is the maximum amount the banking system might lead

Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system. All figures are in billions. The reserve ratio is 25 percent. A. What amount of excess reserves does the commercial banking system have.

  Should the monopolist advertise

A monopolist has two types of customers. There are 100 of type A, who will each pay up to $10 for a single unit of goods, and 50 of type B, who will each pay up to $8. Neither is willing to purchase additional units at any price. If it must charge..

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