Calculation of Expected interest Rate.
1.If the yield curve currently shows a one-year rate of 3.34% (i1,t =3.34%), and a two-year rate of 3.05 % (i2,t = 3.05%), then, according to the expectations hypothesis, illustrate what is the expected interest rate on one-year rate note one year from now (ie1,t+1)?
2.Between November 28th, 2007 and October 14th, 2009 the asset side of the Fed\'s balance sheet increased by $1,244 billion (from $921 billion to$2,165 billion). Where did the Fed obtain the funds to acquire these additional assets?