Composition of the Monetary Base (3 points;.75 points per section)

So in class we showed the evolution of the Monetary Base over the past decade or so.But how does it break down between currency in circulation and bank reserves?

(i)First, upload the total monthly reserve balances maintained at the Fed series (FRED code = RESBALNS), beginning in January 2007 and ending in March 2020.

Then plot on the same graph the non-seasonally adjusted currency in circulation series (FRED code = CURRCIR).(Remember, you use "EDIT GRAPH / ADD LINE" to plot a new series.)So you've now plotted two separate series.(The sum of the two, of course, is the Monetary Base.)

Print the graph and submit it as part of this Exercise.

(ii) By what factor (i.e., approximately by how many times, rounding to zero decimal places) has the level of bank reserves increased from the December 2007 to August 2014?(You'll simply place the cursor over the data value and read off the figures to make this computation.(For example, if bank reserves = 5 and then increase to 30, the factor of increase = 30/5 = 6.)(-

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(iii)Why was it declining since the mid 2010s? (-

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(iv) What is the March 2020 value of total reserves?Express in trillions of dollars, using 4 decimal places. (-

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5.Question #5 Score (-= + /3

Fred work

FRED Purchases of Mortgage-backed Securities (3 points) (1 point per segment) (-

Access the impact of targeted asset purchases of the Fed by plotting using the left scale a monthly (not weekly) basis since January 2008 the Federal Reserve's holdings of mortgage-backed securities (FRED code:WSHOMCB) and on the right scale the average monthly yield on 30-year fixed mortgages (FRED code:MORTGAGE30US.(Note: once you add the second series, use "Format" to show its axis on the right scale.)Make sure that your series runs from January 2008 through March 2020 and that each series plots monthly values.

(i)Print out the graph and submit it as part of this Exercise.(-

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(ii)So how, beginning towards the end of the Great Recession, might these purchases have supported both the housing market and the banking system? (-

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(iii)What is the value of the March 2020 average fixed-rate mortgage rate? Before the pandemic, was it rising or falling over the preceding year?Any ideas why? What do you anticipate happening to this rate in the near future?Why? (-

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