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Federal government affect interest rates?
The federal government affects interest rates more than any other factor. They set the Fed Funds rate and the Prime rate. Fannie Mae, Freddie Mac, FHA. VA, and USDA loans are all backed or guaranteed by the federal government. Most of these loans are securitized into mortgage-backed bonds. Thus the coupon rates and performance of these bonds directly affect rates.
Who creates the caps on government borrowing?
In the USA it is Congress. They have to pass legislation to authorize the government to borrow more money (raise the debt ceiling). Indirectly the Federal Reserve and the market also put a cap on it since the ability to borrow depends on the interest rate that must be paid on any bonds issued by the government. Higher interest rates set by the Fed cause the interest rates that must be paid on government bonds to have to be higher to actually sell. The market also determines what interest rate will be required to sell all the bonds - the less demand there is for the bonds, the higher the interest rate has to be in order to make them attractive enough to sell and the better the yields on other potential investments, the higher the interest rates have to be in order to be sufficiently competitive. The higher the interest rates, the more difficult it is to get approval to borrow.
If a government wanted to expand its capital resources it could?
lower interest rates to make borrowing money easier.
Since 1913 the United States banking system interest rates and the amount of money in calculation have largely been controlled by?
The interest rates and the amount of money have been controlled by the economy rates since 1913.
How can interest rates push a buisness cycle into a contraction?
if interest rates are high, consumers stop purchasing little or no products, and that makes the real GDP start to fall, which is a contraction
What is the significance of interest Rates for an economy?
the significance is that the government profit from specific interest rates in an economy
If the country is in a recession what will the government do to the interest rates to stimulate the economy?
lower
Why does the government sometimes raises interest rates?
To rate paid for investments
How do you eliminate the contractionary gap?
The government can lower taxes or interest rates.
Can a central bank control domestic interest rates and fix their exchange rates at the same time?
I just need an answer
What interest rates do Mechanics Bank offer?
Like most banks Mechanics Bank's interest rates depend upon the rates set forth by the government. Which means that you will have to check with your local bank to find out what the rates are now.
What can the Federal Reserve Bank of New York do to control short term interest rates?
To control short term interest rates, the Federal Reserve Bank of New York should establish a floor on money market rates while improving monetary policy.
Who sets the bank mortgage interest rate?
Contrary to popular belief, banks do not fully control the interest rates for mortgages. It is in fact the Federal Reserve that is responsible for setting and changing the interest rates that you pay.
Why does the Federal Reserve cut interest rates?
banking economics us government
What did Paul Keating's government believe in?
Unbelievably high interest rates. "The recession we had to have"...
Are interest rates on government bonds usually calculated on the face value of the bond?
The interest earned on government bonds is calculated on the face value of the bond plus the interest that has been earned on the bond.
What is the result of the government guiding the supply of money in the economy through regulation of banking interest rates?
Reduced inflation and unemployment rates
