*Why is currency circulating in the hands of the nonbank public considered a liability of the central bank?
Answer to relevant QuestionsThe U.S. Treasury maintains accounts at commercial banks. What would be the consequences for the money supply if the Treasury shifted funds from one of those banks to the Fed? 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 ...Suppose the Federal Reserve did not pay interest on excess reserves. How would the reserve demand curve differ from that in Figure? The Taylor rule in question 19 is thought to be a reasonably good description of policy behavior in the United States in the absence of unusual financial market conditions or deflationary worries. Taking into account what ...Consider a situation where reserve requirements are binding and the Federal Reserve decides to reduce the requirements. How would the Open Market Trading Desk act to maintain the interest rate target, assuming the demand for ...
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