federal funds rate target

In late June the Fed lowered its federal funds rate target from 1.25% to 1%. However between mid June and early August the yield on longer term 10 year Treasury notes rose from 3.1% to over 4.3%. This shows that Federal Reserve activity is irrelevant to the behavior of long term interest rates" Agree or Disagree with the u ...continues

Should the CFO invest in CD's denominated in dollars or in euros?

Suppose the CFO of a German corporation with surplus cash flow has 1million Euros to invest. Suppose that interest rates on 1-year CD deposits in US banks are 2%, while rates on 1 year CD deposits denominated in euros in German banks are currently 4.5%. Suppose further that the CFO expects that the (euro/$) exchange rate will i ...continues

AS/AD effects on the US economy

Read the attached Wall Street Journal article.. Why do you think Greenspan would have liked to see the ECB reduce i rates in the Euro zone last fall at the same time he reduced rates here in the US? (Discuss your answer in terms of AS/AD effects on the US economy.)

Fed's policy

Since January of 2001 the Fed has reduced its Fed funds rate target from 6.5% to 1%. Nonetheless, the number of people at work is less than (and the unemployment rate higher than) when the Fed embarked on this expansionary monetary policy. Why hasn't the Fed's policy been more effective over the last 2.5 years in restoring stro ...continues

Fed Funds market

Explain why the Fed must normally add reserves to the banking system via open market operations on most days in order to maintain its interest rate target in the Fed Funds market.

Tax policy

Please read the attached and answer the follows. A)What possible macroeconomic arguments might George Bush use to defend his tax cuts at this time. B)Why do you think the IMF is concerned that these tax cuts may be bad economic policy, and not just for the US, but for the world economy? C)What would happen to ...continues

Fed's policy strategy

Read the attached and answer the following question. Critically analyze the reasons for shifting Fed's policy strategy from being patient to not being patient in raising the interest rate from its current 45 year low. What would be the possible effect of raising the interest rate by the Fed, as expected to happen later this ...continues

4463-econ

Category: Economics > Macroeconomics Subject: economic rationale and anlaysis Details: Write concise well-reasoned paragraphs using economic rationale and analysis: (a) Discuss two benefits to the New Zealand economy due to the export education industry. (One paragraph, max 100 words). (b) Discuss two factors impacti ...continues

Exchange Rate Calculations

Suppose the CFO of a German corporation with surplus cash flow has 1million Euros to invest. Suppose that interest rates on 1-year CD deposits in US banks are 2%, while rates on 1 year CD deposits denominated in Euros in German banks are currently 4.5%. Suppose further that the CFO expects that the (euro/$) exchange rate will i ...continues

Tax Cut Implications

George Bush this past spring pushed a massive tax cut through congress, whose centerpiece was elimination of the income tax on dividends and acceleration of previously enacted rate cuts on upper income tax brackets. The IMF in an unusual move sharply criticized these potential tax cuts. IMF Says Bush Tax Cut Is Poor Policy, ...continues