Will the fed need to increase or decrease the supply

Assignment Help Econometrics
Reference no: EM13209386

Suppose that the demand for Federal funds curve is such that the quantity of funds demanded changes by $120 billion for each 1 percent change in the Federal funds interest rate. Also, assume that the current Federal funds rate is at the 3 percent rate that is targeted by the Fed. Now suppose that the Fed re-targets the rate to 3.5 percent.

Assuming no change in demand, will the Fed need to increase or decrease the supply of Federal funds? Increase the supply of Federal funds OR Decrease the supply of Federal funds

By how much will the quantity of Federal funds have to change for the equilibrium to occur at the new target rate?

Reference no: EM13209386

Questions Cloud

Evaluation of strength of each of five competitive forces : What is the evaluation of the strength of each of the five competitive forces (very strong, strong, moderate, or weak?
How to calculate the growth rate of the variable : claimed that if z+x/y, then g(z) = g(x)-g(y), where g(.) represent the growth rate of the variable in question. Prove this result in a formal way using two methods. First, repeat the method that we used in class to prove that if z = xy, then g(z)=g..
Global trade patterns changed from 1750 to present : Choose TWO of the areas listed below and analyze how each area’s relationship to global trade patterns changed from 1750 to present. Be sure to describe each area’s involvement in global patterns around 1750 as your starting point.
Explain what is the empirical formula for the hydrocarbon : Complete combustion of 3.90 g of a hydrocarbon produced 12.0 g of CO2 and 5.54 g of H2O. What is the empirical formula for the hydrocarbon?
Will the fed need to increase or decrease the supply : Suppose that the demand for Federal funds curve is such that the quantity of funds demanded changes by $120 billion for each 1 percent change in the Federal funds interest rate. Also, assume that the current Federal funds rate is at the 3 percent ..
Compute the molar mass of the compound : CCl4 lowered the freezing point of the solvent by 5.40 K . Calculate the molar mass of the compound.
Compute themolarity and molarity of sucrose : The mass density of the resulting solution was 1040 kg/m^3. Calculate themolarity and molarity of sucrose in the solution.
Define what is the empirical formula of the unknown compound : An unknown compound contains only C, H, and O. Combustion of 3.60 g of this compound produced 8.18 g of CO2 and 3.35 g of H2O.
Statements regarding carbon dioxide : Which of the following statements regarding carbon dioxide is true?

Reviews

Write a Review

Econometrics Questions & Answers

  How might a factor affect the operators pricing policy

A golf course operator must decide the green fees (prices) to set on rounds of golf. Daily demand during the week is Pd=36-Qd/10, where Qd is the number of 18-hole rounds and Pd is the price per round.

  Calculate the stocks coefficient of variation

Calculate the stock's expected return. Round your answer to two decimal places. Calculate the stock's standard deviation. Round your answer to two decimal places. Calculate the stock's coefficient of variation. Round your answer to two decimal places..

  Evaluate overall explanatory power of regression model

Evaluate the overall explanatory power of the regression model. Use a 0.05 level of significance. State all your hypotheses and explain your results. Do not use rules of thumb. calculate the F statistic to answer this question.

  Calculate the intercept in each of the four quarters

Consider a firm subject to quarter-to-quarter variation in its sales. Suppose that the following equation was estimated using quarterly data for the period 2006-2013 (the time variable goes from 1 to 32). The variables D1, D2 and D3 are , respecti..

  What is the irr-internal rate of return

An investor deposits $30,000 annually at the end of each year for the next 15 years. At the end of the 16th year he starts to withdraw a geometric series of 20 annual payments, each 5% larger than the previous one. If the first payment is $50,000

  What is the socially optimal number of concerts

The Santa Barbara Bowl (SBB) holds outdoor music events (M), earning $3 of revenue from each concert and with total costs of cM(M) = M2=8 for M concerts. Ursula is a writer who lives right next to the SBB and who sells her novels on the competitiv..

  What is the market value of the old equipment

Online Educators (OE), a not-for-profit firm exempt from taxes, is considering replacement of some electronic equipment associated with its distance learning (DL) facility. They spent $100,000 on the equipment 3 years ago and have depreciated it t..

  What is the per-worker production function

Assuming no population growth or technological progress, find the steady-state capital stock per worker, output per worker, and consumption per worker as a function of the saving rate and the depreciation rate.What is the per-worker production fun..

  How much more should you receive in annual salary

One of your professors has made you an offer you can't refuse. You are getting a four year research assistantship to earn your PhD after you receive your BS degree. The assistantship will pay you $2,600 per month starting in June, immediately afte..

  How to formulate a linear programming model

The Charm City Cereal Company makes a cereal from several ingredients. Two of the ingredients, oats and rice, provide vitamins A and B. The company wants to know how many ounces of oats and rice it should include in each box of cereal to meet.

  Does longland experience diminishing returns

For three years, there was no technological change in Longland but capital per hour of labor increased from $10 to $20 to $30 and real GDP per hour of labor increased from $3.80 to $5.70 to $7.13. Then, in the fourth year, capital per hour of labo..

  Explain how sub-prime mortgages hit the headlines

you are Chairman of the FED. In early 2006 you noticed that M1 began to shrink. In other words it was showing negative growth. Economic growth was slowing, sub-prime mortgages hit the headlines, and fears were that we were in the 'R' word.

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