In carrying out open market operations, the Federal Reserve buys and sells U.S. Treasury securities. Suppose the U.S. government paid off all its debt. Could the Federal Reserve continue to carry out open market operations?
Answer to relevant QuestionsPlot 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 ...Suppose, one morning the Open Market Trading Desk drastically underestimates the demand for reserves when deciding the quantity of reserves to supply to the market. Based on analysis of the market for bank reserves, explain ...Discuss the coefficients on the inflation gap and output gap terms in the Taylor rule given in equation (1). If you could change the relative importance of the coefficients, what would you choose? Outline and compare the ways in which the Federal Reserve and the ECB added to or adjusted their monetary policy tools in response to the financial crisis of 2007-2009 and subsequent financial crisis in the euro area. With nominal interest rates at zero, expectations of deflation raise the real interest rate. Japan has faced the zero-bound-deflation problem for many years. Plot since 2000 the nominal interest rate on Japanese Treasury ...
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