Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Relate Overnight interest rates targets with money supply
There are many ways to explain the important connection between the overnight interest rate target and the money supply. We will use an example to demonstrate why a decrease in the overnight rate target increases the money supply.
Imagine that the central bank changes the target from 6% to 4%. Before lowering their target, overnight interest rates were at around 6%, say between 5.6% and 6.4%. When the central bank cuts the target to 4%, it signals that it wants to see an overnight rate around 4%.
Remember that central banks normally have standing facilities allowing banks to borrow from the central bank at a rate slightly above the target rate (and to lend at a rate slightly below). If the central bank does nothing except to change the target rate, the banks would immediately use the standing facilities and borrow from the central bank. They were used to borrowing at rates around 6% overnight but can now borrow from the central bank at slightly above 4%. But the central bank does not want the standing facilities to be used - it wants the overnight rate to be close to the target such that the banks lend and borrow from each other in the market. The question then is, how can they influence the overnight market so that banks will want to borrow / lend at around 4%? The answer is by increasing the monetary base and thus the money supply.
why is imports subtracted from the expenditure approach
Q. Characteristics of endogenous growth theory? There are many different explanations for technological progress. Most of them, though, have many common characteristics:
is there a graph for says law?
impact of change in government expenditure and tax on fiscal policy
Singer suggests that although the right to sell blood does not threaten the formal right to give blood, it is incompatible with "the right to give blood, which cannot be bought, wh
what is okun''s law ? In economics study, Okun's law also named after Arthur Melvin Okun is an empirically observed relationship relating among unemployment to losses in a specific
Scope of Economics
In 2010, Forbes magazine listed Bill Gates, the founder of Microsoft, as the richest person in the United States. His personal wealth was estimated to be $53 billion. If there were
Use a diagram of the open economy model (e.g. fig 32.4 from the text) to illustrate and explain the effect of the following event on the market for loanable funds, the level of net
Q. Explain the classical motivation? The classical motivation: Consumers want to smooth their consumption over time. In good times, consumers know that it is a temporary stat
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd