Federal funds rate will rarely be above the discount rate

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Reference no: EM132016744

1. If the required reserve ratio is 10.00%, currency in circulation is $400 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the M1 money 1.multiplier is:

2. Assess each comment and either True, False, or Uncertain. Be sure to explain your response.

(a.) “Typically speaking, one should expect that the federal funds rate will rarely be above the discount rate.”

(b.) “By paying interest on reserve accounts, the Fed is limiting the effects of in?ation resulting from its balance sheet expansion during and after the ?nancial crisis.”

Reference no: EM132016744

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