Home » (11 pts) Since August 2008 there have large injections of reserves and currency in circulation, yet there has been a small increase in the money…

(11 pts) Since August 2008 there have large injections of reserves and currency in circulation, yet there has been a small increase in the money…

(b)   (7 pts) Before the channel-corridor model was used, explain why the deviation of the equilibrium federal funds rate from the target was potentially very large and quite volatile.

(c)  (6 pts) Assume the Federal Reserve is using the channel/corridor approach. Suppose the equilib-rium Federal Funds rate is equal to the discount rate, which is above the targeted Federal Funds rate and borrowed reserves are always positive. Illustrate how this can occur using a graph of the Federal Funds market.

(d)   (6 pts) In response to an equilibrium Federal Funds rate consistently above the target (so the situation described in part (c)), the Federal Reserve increases nonborrowed reserves. Under what circumstances is this monetary policy procyclical? Under what circumstances is it countercyclical? Discuss.

7.  (25 pts) A foreign country (say Japan) is concerned its in ation rate is too high and decides to use monetary policy to lower in ation. Assume there is a liquidity e ect. In your answers below, you must draw a graphs to receive full credit.

(a)  (5 pts) Provide a de nition of the liquidity e ect.

(b)   (5 pts) What type of monetary policy will Japan use to lower in ation, assuming there is a liquidity e ect?

(c)  (5 pts) Describe the impact of Japan’s monetary policy on the equilibrium nominal exchange rate between the US and Japan.

(d)   (5 pts) The policy is successful and the Japanese in ation rate is lowered. Describe the long-run implications for the nominal exchange rate of the decline in the Japanese in ation rate relative to the US in ation rate.

(e)  (5 pts) The growth rate of real output in the US increases relative to growth in Japan. What are the implications for the yen/dollar exchange rate?

Show more







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10