Market operations as principal tool of monetary management

Assignment Help Business Economics
Reference no: EM131088655

This question pertains to the tools of monetary policy

a) Why does the Fed use open market operations as its principal tool of monetary management, rather than changes in the required reserve ratios, or changes in the discount rate? (Hint: think about the matter of'' announcement effects''.

 

b) What are the differences in the effects that each technique would have on individual banks, on the commercial banking as a whole, and on the money supply?

Reference no: EM131088655

Questions Cloud

Developing countries can increase productivity growth : Developing countries can increase productivity growth more easily than industrial countries. Does this imply that they will eventually be able to achieve the same living standards as industrial countries? Why or why not?
Express the empirical demand function : The empirical demand function for good X is estimated in log-linear form as ln Qˆ = 11.74209 – 1.65 ln P + 0.8 ln M – 2.5 ln PY where Qˆ is the estimated number of units of good X demanded, P is the price of X, M is income, and PY is the price of rel..
What laws or groups in our economy : After September 11, 2001, there was much talk that the United States was going to go into a depression. There was, in fact, a downturn in the economy that was considered by many to be a recession. A depression did not occur. Why is another depression..
Indifference curve and optimal portfolio-capital market line : Defend the following terms using graphs or equations to illustrate your answers wherever feasible. Portfolio feasible set, efficient portfolio, efficient frontier. Indifference curve, optimal portfolio. Capital Asset Pricing Model (CAPM) Capital Mark..
Market operations as principal tool of monetary management : Why does the Fed use open market operations as its principal tool of monetary management, rather than changes in the required reserve ratios, or changes in the discount rate? What are the differences in the effects that each technique would have on i..
Appetizer budget : Suppose Janet has an "appetizer budget" of $165 per week, which she spends on cheese and fruit. To maximize her utility, Janet will purchase.
Explain why income taxes were raised : Explain why income taxes were raised 200% (from 1.5, 4, and 25 percent to 5, 8, and 63 percent) by the Revenue Act of 1932, and describe the effects.
Whose dream is to see his son grow up to be an engineer : A father, whose dream is to see his son grow up to be an engineer, plans to invest a certain sum towards his son's education upon his birth. He will need to withdraw $12,000 each year from the 21st to the 24th year of his sort's life. How much should..
World trade organization might affect domestic policy : Explain how decisions made at the World Trade Organization might affect domestic policy. How might domestic policy affect decisions at the World Trade Organization? Finally, tell how important you think the United States’s participation in the WTO is..

Reviews

Write a Review

 

Business Economics Questions & Answers

  Economics in action-the mythical man-month

In an" Economics in Action" section of ch.11,Krugman/Wells talked about "The Mythical Man-Month," What industry and job did this section talk about? What pitfall of logical thinking was described in the section? Why did this problem arise?

  Until the marginal rate of technical substitution reaches

The wall street journal reported that Japan’s No 4 automaker-Mitsubishi Motors- announced a major restructuring plan in an attempt to reverse its 6 percent declining global sales,. Determine the rate at which Mitsubishi can rent capital and the margi..

  Truck repair was evaluated for replacement

After 8 years of use, the heavy truck engine overhaul equipment at Pete’s Truck Repair was evaluated for replacement. Pete’s accountant used an after-tax MARR of 8% per year, tk = 30%, and a current market value of $25,000 to determine AW = $2100. Th..

  Define the concept of an externality

Define the concept of an externality. Why will unregulated market systems not allocate resources efficiently where externalities are present? Draw a diagram to illustrate the over allocation of resources to a market characterized by negative external..

  What are the optimal prices for the two firms

Two firms that produce an identical product are located at each end of a street of length 10. There are consumers uniformly distributed along this street who value the product at V = 50 and desire at most one unit of the product. What are the optimal..

  Find the herfindahl index for an industry composed

Find the Herfindahl index for an industry composed of (a) three firms- one with 70 percent of the market, and the other tow with 20 and 10 percent of the market

  Federal reserve has not formally adopted inflation targeting

The Federal Reserve has not formally adopted inflation targeting. The inflation target, stated or implicit, is usually around 2%. The Federal Reserve chairman credited with ending the Great Inflation is

  Minimum monthly payment to continue to break even

You have maxed out your $10,000 credit card, which is being charged 12.8% interest compounded daily. What is the minimum monthly payment to continue to break even? How much should you pay each week to get out of debt within one year?

  Cappuccino vending machine is designed to dispense average

A cappuccino vending machine is designed to dispense an average of μ oz per cup. If the ounces per fill are normally distributed, with a standard deviation of 0.4 oz, what value should μ be set at so 6 oz cups will overflow only 2% of the time?

  What about mergers of justice - federal trade commission

Elucidate the rationale and the implications of the new guidelines used by the Department of Justice and the Federal Trade Commission for evaluating proposed mergers.

  Illustrate what is total subsidy that firm receives

Illustrate what is total subsidy that firm receives at this optimal level of emissions? total abatement cost of firm at optimal level of emissions.

  Find a recorded function of social welfare that is earlier

There was not a needy person among them, for as many as owned lands or houses sold them and brought the proceeds of what was sold. They laid it at the apostles’ feet, and it was distributed to each as any had need

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