Fed fund rate and Monetary Policy Tools

(read carefully)

Open market sale causes the Fed fund rate to rise because the sale operation willdecrease the reserves from the market

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True

False

A reserve requirement increase will increase the demands for reserves and hence will cause the fed fund rate to fall

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True

False

The Vertical l section of the supply curve represents that the reserves are supplied from Fed through borrowing window at the Fed Fund Rate

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True

False

Changes in Discount rate will have some effect on the Fed Funds rate as long the demand curve intersects the supply curve on its horizontal section

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True

False

The horizontal section of the supply curve represents that the reserves are supplied by Fed's Open Market Operations

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True

False

Open Market Purchase will cause theFed fund rate to rise because the fed's purchases decrease the reserves from the market

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True

False