One morning the open market account manager at the new york, Ask an Expert

Economics

One morning the Open Market Account Manager at the New York Federal Reserve Bank discovers that the effective (equilibrium) market federal funds rate is 1.25%. Suppose the target federal funds rate is 2%. What does this indicate? What would the Account Manager decide to do (open market purchase or open market sale)? Draw a reserves market diagram to explain your answer.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91568239

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