Settlement balances and on the overnight interest rate

Assignment Help Business Economics
Reference no: EM131097334

Suppose that there is a net government disbursement of $80 (i.e., the government’s payments to the public exceed its receipts from the public by $80).

a) In the absence of any offsetting transactions by the Bank of Canada, explain the effects of this net government disbursement on settlement balances and on the overnight interest rate.

Use the reserve market diagram to explain your answer.

b) Explain how the Bank of Canada can use the auction of government deposits to neutralize the effects of this net government disbursement on settlement balances and on the overnight interest rate so that the Bank’s target for the overnight interest rate is maintained. Show the effects of this neutralizing procedure on the on the balance sheets (T-accounts) of the Bank of Canada and the LVTS Participants.

Reference no: EM131097334

Questions Cloud

Communicate depends on age or generation : Do you believe the way leaders communicate depends on their age or generation? Explain why you agree or disagree with this statement and /or at least one of the readings. Practice using in-text citations for the article(s) as you write your respon..
Calculate the equilibrium price and quantity in the market : Market research has revealed the following information about the market for chocolate bars: The demand schedule can be represented by the equation Qd = 1.600 - 300P. where Qd is the quantity demanded and P is the price. Calculate the equilibrium pric..
Prepare an unadjusted trial balance from the spreadsheet : The company purchased $7,500,000 of raw material inventory on account. "On account" means that their suppliers have not yet been paid. Prepare an unadjusted trial balance from the spreadsheet
Perfectly price discriminating monopolist : Which of the following statements is true with respect to a market in which there is a perfectly price discriminating monopolist?
Settlement balances and on the overnight interest rate : Suppose that there is a net government disbursement of $80 (i.e., the government’s payments to the public exceed its receipts from the public by $80). In the absence of any offsetting transactions by the Bank of Canada, explain the effects of this ne..
Summary on:the political dynamics of higher education policy : Write a summary of the following Article: The Political Dynamics of Higher Education Policy.
Determine the equivalent stress in the cylinder : Determine the maximum shear stress at the outer surface of the cylinder.
Expected utitily of income and utility of expected income : John has a risk asset worth Y and derives utility from the consumption of his wealth. Suppose W=100, L=36, P=0.5 , Find John's expected Utitily of income and Utility of expected income and explain that intuition behind each. Now suppose that he has a..
Determine the moment of this force about point o : 2/43 As a trailer is towed in the forward direction, the force F = 120 lb is applied as shown to the ball of the trailer hitch. Determine the moment of this force about point O.

Reviews

Write a Review

 

Business Economics Questions & Answers

  Find the monopolist price and quantity

Suppose a monopolist has cost curve C(q) = 10 + 3q + 0.1q 2 and faces demand q = 12 ? p. Find the monopolist price and quantity. Return to the situation in (a) with only one market. What would be the monopolist profit?

  Aging production line that constantly needs maintenance

You supervise an aging production line that constantly needs maintenance and new parts. Last month you spent $25,000 replacing a failed controller. Should the following plan be accepted if the interest rate is 15%. The net installed cost of the new l..

  In current business publications

In current business publications, find examples of forms whose strategies to increase profits focus primarily on generating more revenue. Compare these cases with firms that are trying to cut costs to increase profits

  Passage of the affordable care act

With the passage of the Affordable Care Act the U.S. government requires that everyone have some form of health insurance. One of the provisions of the law is that firms with more than 50 full-time workers must provide health insurance to those worke..

  Would your portfolio be riskless-explain

Suppose you own a portfolio consisting of $250,000 of long-term U.S. government bonds. What is the least risky security you can think of? Explain. Would your portfolio be riskless? Explain.

  Presidential candidate has decided to enter primaries

A presidential candidate has decided to enter primaries in those states in which at least 20% of voters support her. Random samples of 200 voters were taken in each of a number of states. In New Hampshire, 33 voters supported the candidate. Test at a..

  Contrast direct finance and indirect finance

Compare and contrast direct finance and indirect finance which is more likely to have a larger share of the total financial market in a mature economy and the young economy why.

  Calculate the breakeven output quantities for alternative

Nature's Green, Inc., a manufacturer of alfalfa tablets sold in health-food stores, currently operates just outside of Meno, California. Nature's Green is considering two alternative proposals for expansion, because it has run out of acreage to grow ..

  Discuss why workers join unions

Discuss why workers join unions? What implications would this have for the organization that wishes to remain non-union? Would you join a union? Why or why not?

  Illustrate its market with supply and demand curve

Pick a good or service and illustrate its market with supply and demand curves. Explain what each curve represents and tell what (specifically) would shift each of the curves. A properly-labeled diagram of the supply and demand curves.

  Total effect of policies on real gross domestic product

In the early1980’s, to combat the recessionary forces, President Ron Reagan used expansionary fiscal policy by lowering (marginal) tax rates to combat the recession. Concurrently, Paul Volcker, Chairman of the Federal Reserve Board of Governors, redu..

  Comparing the opportunity cost of producing wine

Suppose that Italy and Germany both produce fish and wine. Italy's opportunity cost of producing a bottle of wine is 4 pounds of fish while Germany's opportunity cost of producing a bottle of wine is 9 pounds of fish. By comparing the opportunity cos..

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