Comments on: Interest Rate Drop Boosts Gold!

By: Rach6

Rach6 — Sat, 22 Aug 2009 01:31:26 +0000

Banks set the Prime Rate… the other rates are set by a different entity.

By: dvotd2one

dvotd2one — Fri, 21 Aug 2009 23:22:53 +0000

d. 5.17%
Hear we can take 97500$ as principle amount.
So 5.17% of $97500=5040.75 is the amt for 1 year
or 5040.75/365*181=2499.65 or can be 5000/-

By: Esther L

Esther L — Fri, 21 Aug 2009 22:29:37 +0000

15. In an open-market purchase the Federal Reserve ____ government bonds and the supply of bank reserves ______.
correct answer is:
A. buys; increases
16. A banking panic is an episode in which:
correct answer is:
A. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system.

By: supermuslim123

supermuslim123 — Fri, 21 Aug 2009 20:50:31 +0000

Pakistan has a very rough/bad economy, both due to politicial issue's.

An increase in 200 basis points is not going to affect the economy much, for a country such as Pakistan a lot more will need to be done.

By: Alby

Alby — Fri, 21 Aug 2009 20:21:08 +0000

Well to answer your first question the Fed uses Open Market Operations to set the Funds rate. The Fed will increase or decrease the Money Supply by buying or selling bonds in order to set the interest rate. That 1% is approx.

Second question if a bank has to borrow from each other in order to maintain their required reserves, they would loan another bank at federal funds effective rate which is close to the 1% (it's approx). If a bank can't find a lender then it goes to the Fed and gets a loan from them at 1.25%.

Third Question; Yes basically. The Fed hope to spur more lending and encourage banks to invest more freely.