The Fed Funds rate to rise. planned inventory investment to fall depository inst

Question

The Fed Funds rate to rise. planned inventory investment to fall depository institutions to lend more freely. foreign investors to buy more T-Bills. An increase greater than $1 trillion Total deposits would decrease, but there is not enough information to compute the amount. If the Federal Reserve sells S50 billion of short-term U.S. Treasury securities to the public, other thing; constant, what will this tend to do to short-term security prices and interest rates? Prices and interest rates will both rise. Prices will rise and interest rates will decline. Prices and interest rates will both decline. Prices will decline and interest rates will rise. There will be no changes in either prices or interest rates.6. Given Die folio data, find (he expected me of in nation during the next year

Explanation / Answer

1.

The answer is “d”.

Reserve amount is the central bank requirement to commercial banks. If such reserve amount decreases, banks would be having excess funds or reserves in their hands. This amount could be utilized for providing loans.

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