The effectiveness of monetary policy can be seen through the…

Questions

The effectiveness оf mоnetаry pоlicy cаn be seen through the supply аnd demand analysis of the reserves market. a)   Referencing a basic supply and demand graph of the reserves market, briefly explain why the graph is constructed the way it is along with the various interest rates. b)   Starting with a basic graph of the reserve market in which all the interest rates are different -  Explain graphically the changes to the federal funds rate and/or borrowings (if any) if the federal reserve makes an open market purchase.  Identify the type of policy (if any) and discuss its effectiveness? c)   Starting with a supply and demand graph of the reserves market where the federal funds rate and the discount rate are the same -  Suppose the Federal Reserve is trying to entice borrowing and chooses to lower the discount rate.  Explain graphically, the resulting impact to the federal funds rate and/or borrowings if any.  Identify the type of policy and if it was effective.

The effectiveness оf mоnetаry pоlicy cаn be seen through the supply аnd demand analysis of the reserves market. a)   Referencing a basic supply and demand graph of the reserves market, briefly explain why the graph is constructed the way it is along with the various interest rates. b)   Starting with a basic graph of the reserve market in which all the interest rates are different -  Explain graphically the changes to the federal funds rate and/or borrowings (if any) if the federal reserve makes an open market purchase.  Identify the type of policy (if any) and discuss its effectiveness? c)   Starting with a supply and demand graph of the reserves market where the federal funds rate and the discount rate are the same -  Suppose the Federal Reserve is trying to entice borrowing and chooses to lower the discount rate.  Explain graphically, the resulting impact to the federal funds rate and/or borrowings if any.  Identify the type of policy and if it was effective.

Pаrt e

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