When interest rate increases by FED, then the dollar appreciates. Discuss the previous statement. AND what...

When interest rate increases by FED, then the dollar appreciates. Discuss the previous statement. AND what is its impact on Gold, Bonds prices? (10 lines)

Please Solve As soon as
Thank's
Abdul-Rahim Taysir

Expert Solution

Ans:-When the Federal Reserve rises the federal fund rate ,naturally rises interest rate all over the nation's economy.This greater earning attract the investment from foreign investors also.As a result of this is a very strong exchange rate in US dollar.This increasing interest rate see to advantage in foreign trade .The stronger dollar and rate rise should improve US demand for products all over the world,that will rises business profit for national and international companies alike.When the federal reserve increases the federal fund rate offered government such as bonds and bills.The bonds and bills are frequently observed as the safest investment and will experience a equivalent rise in interest rate.And in the case of gold ,while increasing the interest rate may rise USdollar cause gold price lower,because gold is denominated in US dollar,the elements such as equity prices and instability attached with the supply and demand are the real controller of the price of gold.

Rahul Sunny answered 2 years ago

a. Suppose the Fed increases the interest rate that it pays on reserves. Show with a...

a. Suppose the Fed increases the interest rate that it pays on reserves. Show with a diagram how that would affect the Fed Funds market. Explain. b. What happens to the money supply (say M1) as a result of this action? Explain. Diagrams are mandatory

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will...

If the Federal Reserve increases the interest rate on bank deposits at the Fed, banks will want to hold Select one: a. fewer reserves, so the reserve ratio will rise. b. more reserves, so the reserve ratio will rise. c. fewer reserves, so the reserve ratio will fall. d. more reserves, so the reserve ratio will fall.

When a change in a country’s nominal interest rate is caused by a rise in the expected real interest rate, the domestic currency appreciates

Discuss the following statements. a.“When a change in a country’s nominal interest rate is caused by a rise in the expected real interest rate, the domestic currency appreciates. When the change in caused by a rise in expected inflation, the currency depreciates.” b.“When domestic and foreign bonds are perfect substitutes, a central bank should be indifferent about using domestic or foreign assets to implement monetary policy.”

Other things the same, if the Fed increases the money supply, the interest rate rises so...

Other things the same, if the Fed increases the money supply, the interest rate rises so aggregate demand shifts right. rises so aggregate demand shifts left. falls so aggregate demand shifts right. falls so aggregate demand shifts left.

What happens when the dollar appreciates? a. Net exports increase, and aggregate demand shifts right. b....

What happens when the dollar appreciates? a. Net exports increase, and aggregate demand shifts right. b. Net exports increase, and aggregate demand shifts left. c. Net exports decrease, and aggregate demand shifts right. d. Net exports decrease, and aggregate demand shifts left.

I. What would happen to the nominal interest rate and quantity of money when the Fed...

I. What would happen to the nominal interest rate and quantity of money when the Fed decides to buy bonds through open market operations (OMO)? Answer this using at least 100 words. II. What if the Fed lowers the discount rate? What would happen to the nominal interest rate and quantity of money? Answer this using at least 100 words.

4 ) President Trump has criticized the recent interest rate increases carried out by the Fed...

4 ) President Trump has criticized the recent interest rate increases carried out by the Fed Chairman Jerome Powell . Discuss the pros and cons of both sides of the issue from both perspectives .

Discuss and illistrate graphically why the fed cannot control both the quanity and the interest rate...

Discuss and illistrate graphically why the fed cannot control both the quanity and the interest rate of the reserve in the federal funds market at the same time?

What are some reasons the Fed may change interest rate targets? Why did the Fed cut...

What are some reasons the Fed may change interest rate targets? Why did the Fed cut interest rates sharply in the Great Recession and again in early 2020? What is the Fed's current interest rate policy and what connection does this strategy have with current economic conditions? What are the mandates of the Federal Reserve and how does interest rate policy help the Fed achieve these mandates?

1. a) When the Fed lowers interest rates, what is the impact on the value of...

1. a) When the Fed lowers interest rates, what is the impact on the value of the dollar, exports, imports, consumption, investment, and the AD curve? b) When the Fed raises interest rates, what is the impact on the value of the dollar, exports, imports, consumption, investment, and the AD curve? 2.Explain the differences between classical economists and Keynesians in regards to monetary policy during a recession. 3. Explain efficiency-wage theory.

Question