In August 2007 and in March 2008, the Federal Reserve Board reduced the discount rate to ease liquidity conditions for banks. Plot discount window borrowing (FRED code: DISCBORR) between January 2007 and December 2008. As a second line, plot on the right axis the difference between the discount rate (FRED code: DPCREDIT) and the fed funds rate target (FRED code: DFEDTAR). Did narrowing the spread between the discount rate and the federal funds target rate trigger the borrowing surge in September-October2008?
Answer to relevant QuestionsFollow the impact of a $100 cash withdrawal through the entire banking system, assuming that the reserve requirement is 10 percent and that banks have no desire to hold excess reserves. Suppose the currency-to-deposit ratio is 0.25, the excess reserve-to-deposit ratio is0.05, and the required reserve ratio is 0.10. Which will have a larger impact on the money multiplier: a rise of 0.05 in the currency ratio ...Consider an open market purchase by the Fed of $3 billion of Treasury bonds. What is the impact of the purchase on the bank from which the Fed bought the securities? Compute the impact on M1 assuming that:(1) The required ...Plot on a weekly basis the ratio of currency (FRED code: CURRENCY) to checkable deposits (FRED code: TCD) from the start of 2000 through 2002. Download the data and identify the week of the downward spike in the graph. Do ...Federal Reserve buying of mortgage-backed securities is an example of atargeted asset purchase. Explain how the Fed’s actions are intended to work.
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