Question #4

Composition of the Monetary Base

Create Graph with data base: https://fred.stlouisfed.org

(i)First, search for the total monthly reserve balances maintained at the Fed series (FRED code = TOTRESNS),beginning in January 2007 and ending in in March 2021.

Then plot on the same graph the non-seasonally adjusted currency in circulation series (FRED code = CURRCIR).(Remember, you use "EDIT GRAPH / ADD LINE" to plot a new series.)So you've now plotted two separate series.(The sum of the two, of course, is the Monetary Base.)

1. Attach Graph

(ii)By what percentage,rounding to one decimal place) did the level of bank reserves increase from the Jan 2020 toMarch 2021?(You'll simply place the cursor over the data value and read off the figures to make this computation.(For example, if bank reserves = 5 and then increase to 30, the factor of increase = 30/5 = 6.)(-

Answer:

(iii)Why were bank reserves declining from the mid 2010s till January 2020?(-

Answer:

(iv)What is theMarch 2021value of total reserves?Express in trillions of dollars, using 3 decimal places.(-

Answer:

5.Question #5

Fred work

FRED Purchases of Mortgage-backed Securities

Assess the impact of targeted asset purchases of the Fed by plotting using theleft scaleon amonthly(not a weekly)basis fromJanuary 2008 through April 2021the Federal Reserve's holdings of mortgage-backed securities (FRED code:WSHOMCB) and on theright scalethe averagemonthlyyield on 30-year fixed mortgages (FRED code:MORTGAGE30US.(Note: once you add the second series, use "Format" to show its axis on the right scale.)Make sure that your series runs from January 2008 through April 2021 and thateachseries plotsmonthlyvalues.(When you add the second series, the beginning date may change.)

(i)Attach Graph

Answer:

(ii)So how, beginning towards the end of the Great Recession, might these purchases have supported both the housing market and the banking system?(-

Answer:

(iii)What is the value of the April 2021 average 30-year fixed-rate mortgage rate, expressed as a percentage with two decimal places, e.g., 4.12%?What has been the evolution of this rate since the end of 2018?Any ideas why?What do you anticipate happening to this rate in the near future?Why do you think that?(-

Answer: