Indicate whether the following statement is true or false. Provide at least thre
ID: 2691494 • Letter: I
Question
Indicate whether the following statement is true or false. Provide at least three sentences of Explanations or calculation to support your answer. 6. The Federal Reserve adjusts the amount of funds in depository institutions in order to influence the federal funds rate by adjusting the reserve requirement ratio. Federal funds rate is the rate charged by the Federal reserve banks on loans they extend to commercial bank. It is not influenced by the supply and demand for funds in the federal funds market. The federal fund rate is closely monitored by all types of firms and market participants view changes in the federal fund rate to an indicator of potential changes in other market interest rates. A) True B) False ExplanationExplanation / Answer
Indicate whether the following statement is true or false. Provide at least three sentences of Explanations or calculation to support your answer. 6. The Federal Reserve adjusts the amount of funds in depository institutions in order to influence the federal funds rate by adjusting the reserve requirement ratio. Federal funds rate is the rate charged by the Federal reserve banks on loans they extend to commercial bank. It is not influenced by the supply and demand for funds in the federal funds market. The federal fund rate is closely monitored by all types of firms and market participants view changes in the federal fund rate to an indicator of potential changes in other market interest rates.
A) True
federal fund rate most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate.re