1. | Banks can borrow money from what sources? I. other banks II. the Fed's discount window II. ATM machines | | A. | I only | B. | II only | C. | III only | D. | I and II only | | Correct | Points Earned: | 1/1 | Your Response: | D | 2. | For a given money multiplier, a decrease in the banking system's reserves will cause the money supply to: | | A. | increase. | B. | decrease. | C. | remain constant. | D. | become difficult to predict. | | Incorrect
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directors Factors influencing discount rate Discount rate: interest rate charged to commercial banks/depository institutions on loans received from the Fed Factors: printing and lending it out money, consumer savings goes down, government borrows money the demand will go up and the interest rate will increase Supply ↑ then interest rates ↓ Demand ↑ then interest rates ↑ How does the discount rate affect the decisions of banks in setting their specific interest rates? Higher discount rates = high
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Federal Reserve and adjusting the discount rate, how the federal funds rate affect the decisions of banks in setting their specific interest-rate, how monetary policy aims to avoid inflation and control money supply, and last but not least what indicators are evident that there is too much or too little money within the economy and how monetary policy is aiming to adjust this problem. The Federal Reserve System is the United States Central banking system which was created on December 23, 1913. Federal
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to promote economic growth of the economy. Monetary policy is concerned with changing the supply of money stock and rate of interest for the purpose of stabilizing the economy at full-employment or potential output level by influencing the level of aggregate demand. More specifically, at times of recession monetary policy involves the adoption of some monetary tools which tend the increase the money supply and lower interest rates so as to stimulate aggregate demand in the economy, on the other
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system to provide sufficient liquidity to prevent a run on the dollar and the banks. Meanwhile, Japan since the late Eighties had been wrestling with a stagnant economy, deflation, and a rising currency. The Bank of Japan was already printing money prior to Sept 11th to support its own debt-ridden banks and to stimulate the domestic economy, and has continued with this policy ever since: printing yen to purchase
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effort to control exchange rates. This is called the monetary policy which aims to control money supply and interest rate to control the amount of money circulating in an economy. Countries do this for several reasons: * Reduce inflation: Inflation happens because there are too much money in the economy. Therefore, they can buy their own currency (by selling assets) to reduce the amount of money in the economy => reduced inflation * Reduced current account deficit (surplus): In this
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What we call the Fed is also known as the Federal Reserve System. This is known as the central banking system of the United States of America. The Federal Reserve was first established on December 23, 1913. It was enacted by the Federal Reserve Act. This is an act to provide for the establishment of Federal Reserve banks. Mostly it was to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States of America
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2014 Submitted To : Dr. Pinky Desai Submitted By: Anu Mary Tom-20135009 Arpita Christian-20135011 Lakshman Shastri-20135031 Mahesh Patel-20135033 Mruganda Shah-20135038 Lakshman Shastri-20135031 Macro Economics Assignment-I Question 1: History of Devaluation of Indian Rupee & its Impacts The Indian rupee, which was on par with the American currency at the time of Independence in 1947, has depreciated by a little more than 65 times in the past 66 years. At the time of independence
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description of Australia and china money market and interest rate trends. Besides, the leading roles of changing structure of economy and monetary policy for each country will be discussed in detail. Moreover, the most crucial point of this report is to analyse both historical and future money market interest rate trends in these two countries. Table of contents Transmittal document 1 Table of contents 3 Executive summary 4 Introduction 5 Australia 5 Historical Money Market Interest Rates in
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Is Inflation in India Structural or Monetary? Inflationary Situation: It’s a situation in the economy where ‘too much money is chasing too few goods’. So when the products & services available are less as compared to the money supply in the money market, the economy witnesses an uptrend in their prices in order to adjust for the larger quantum of money chasing them. Structural Policy: A Structural policy is a term used for the whole of the politico-economic measures for the organization of the
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