AHW3-10 (1)

AHW3-10 (1) - Econ 1500- HW3: The Fed Part 1. The FedShort...

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Econ 1500-- HW3: The Fed Part 1. The Fed—Short Questions Go to the Fed’s website and read about (a) The Fed: Purposes and Functions (overview): http://www.federalreserve.gov/pf/pf.htm (b) Monetary policy, go to “Monetary policy tools”, and click on “Open market operations”, “Discount rate” and “reserve requirements” Answer these questions: 1. The FOMC is composed of the __ 7_ ____ members of the Board of Governors, the president of the Federal Reserve Bank of _________New York _______, and ____ 4 _______ presidents of the other Reserve Banks that serve on a rotating basis. 2. To supply reserves to the banking system, list two activities that the FED could undertake. open market purchases of treasury securities__ lower discount rate and make additional discount loans 3. What securities does the New York FED Trading Desk (generally) trade when given instructions by the FOMC? U.S. Treasury securities 4. Does the FED Trade in the Federal Funds market? _________ No ___ If yes, who else trades? If not, who does trade in the Federal Funds market where the Federal Fund rate is determined? Banks or dealers 5. Traditionally, (before August 2007) if the FED needed to act as a lender of last resort to temporarily illiquid banks, what tool would it have probably use? Discount Window 6. In country A, actual output growth is much slower than potential. Should the central bank lower interest rates, raise interest rates, or keep interest rates steady? Lower rates.
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AHW3-10 (1) - Econ 1500- HW3: The Fed Part 1. The FedShort...

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