Question: Fed fund rate and Monetary Policy Tools (read carefully) Open market sale causes the Fed fund rate to rise because the sale operation willdecrease the

Fed fund rate and Monetary Policy Tools

(read carefully)

Open market sale causes the Fed fund rate to rise because the sale operation willdecrease the reserves from the market

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True

False

A reserve requirement increase will increase the demands for reserves and hence will cause the fed fund rate to fall

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True

False

The Vertical l section of the supply curve represents that the reserves are supplied from Fed through borrowing window at the Fed Fund Rate

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True

False

Changes in Discount rate will have some effect on the Fed Funds rate as long the demand curve intersects the supply curve on its horizontal section

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True

False

The horizontal section of the supply curve represents that the reserves are supplied by Fed's Open Market Operations

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True

False

Open Market Purchase will cause theFed fund rate to rise because the fed's purchases decrease the reserves from the market

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True

False

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