Describing what is likely to happen to interest rates, deposits, and total bank reserves.
1.What special status is awarded to the president of the Federal Reserve Bank of New York (FRBNY) in the determination of U.S. monetary policy? Why is this so?
2. In the text it was stated that the FOMC meets at least eight times each year on preannounced dates in order to set monetary policy. What would happen if an emergency situation developed in the financial markets? Would the Federal Reserve have to wait until the next scheduled FOMC meeting?
3. Describe what is likely to happen to interest rates, deposits, and total bank reserves as a result of the transactions listed below:
a. The Federal Reserve sells $50 million in securities outright to a bank.
b. The Federal Reserve buys $85 million in securities outright from a bank.
c. The Federal Reserve sells $93 million in securities outright to a nonbank security dealer.
d. The Federal Reserve buys $42 million in securities outright from a nonbank security dealer.