Everything else held constant, in the market for reserves, when the federal funds rate equals the interest rate paid on excess reserves, raising the interest rate paid on excess reserves
A) increases the federal funds rate.
B) lowers the federal funds rate.
C) has no effect on the federal funds rate.
D) has an indeterminate effect of the federal funds rate.
A
You might also like to view...
An emerging market country that successfully used exchange-rate targeting to lower its inflation from above 100 percent in 1988 to below 10 percent in 1994 (before devaluation) was
A) Thailand. B) Mexico. C) The Philippines. D) Indonesia.
If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S. Treasury,
A) the monetary base will decline by $1 billion. B) the monetary base will rise by $1 billion. C) the Fed has conducted an unsterilized foreign-exchange intervention. D) the Fed has conducted a sterilized foreign-exchange intervention.