What has been true about interest rates

Assignment Help Finance Basics

Reference no: EM131191028

Analysis of Financial Institutions and Markets Questions-

1. Suppose, as part of an active monetary policy, the Federal Reserve sells government and other securities from its existing portfolio holdings to the banking and financial sectors and the non-bank public. Suppose also that the banking sector is fully "loaned up," meaning that it is holding no excess reserves. Trace through the expected consequences of this secondary market action on the banking system - reserves, loanable and investable funds, and deposits; financial markets - bond and stock prices, and interest rates; inflationary pressures; credit-sensitive spending; and the general state of the economy as measured by real GDP (or real income) and unemployment. Under what circumstances would the Federal Reserve do this?

2. The U.S. Federal government has been running deficits in the hundreds of billions of dollars which means that the U.S. Treasury is issuing hundreds of billions of dollars in new Treasury securities. If this is all you consider, what are the consequences for interest rates, spending financed by private borrowing, the money supply, the bond supply and inflation from this action alone? While the U.S. has been running these massive deficits, what has been true about interest rates? How do you explain this contradiction in interest rate effects and what are the big concerns going forward?

Reference no: EM131191028

Questions Cloud

Construct a d flip-flop that has the same characteristics : Construct a D flip-flop that has the same characteristics as the one shown in Fig. 6-5. but instead of using NAND gates. use NOR and AND gates. (Remember that a one-input NOR gate is equivalent to an inverter.)

Evidence a nu student parties more : At the .05 level of significance, is there evidence a NU student parties more, on average, during college than during HS summer break? (Assume the population of differences follows a normal distribution).

Analyze the reasons using the socratic method : Analyze the reasons using the Socratic method, as Socrates does with Thrasymachus' views on justice in the Republic. Refer to the list of fallacies in the textbook to see if the reasons include any logical inconsistencies that might be used to cha..

Shrinkage cracking and thermal cracking : Consider a Effects of Flexural cracking on structure - Shrinkage cracking & Thermal cracking

What has been true about interest rates : While the U.S. has been running these massive deficits, what has been true about interest rates? How do you explain this contradiction in interest rate effects and what are the big concerns going forward

How many pins are needed for the integrated-circuit package : A ROM chip of 4096 x 8 bits has two enable inputs and operates from a 5-volt power supply. How many pins are needed for the integrated-circuit package? Draw a block diagram and label all input and output terminals in the ROM.

Did past and present experience play a role : Which theory or theories of consciousness and personal identity most resembles how you understand the role of the self in the decision-making process? For example, was the process primarily based in reason? Did past and present experience play a r..

Briefly describe the diet what foods are allowed : Briefly describe the diet. What foods are allowed? What foods are restricted? Based on what you have learned in this module, do you think this diet is healthy for the human body?

Prepare journal enteries to record the collection of monies : Prepare journal enteries to record (1) the collection of monies from tourists and (2) the revenue generated during january.

User Account

All Pages