The housing market has collapsed. banks are becoming very restrictive in their lending practices. which action would the federal reserve take to encourage banks to increase lending to home buyers? increase federal funds rate. lower reserve requirements. sell government securities. raise the discount rate.

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19-12-2022
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The housing market has collapsed. banks are becoming very restrictive in their lending practices. which action would the federal reserve take to encourage banks to increase lending to home buyers? increase federal funds rate. lower reserve requirements. sell government securities. raise the discount rate.

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HarshTiwari HarshTiwari · Answer 1 · 2022-12-25T06:21:50-05:00

The real estate sector is in disarray. The Federal Reserve may take action to encourage banks by easing reserve requirements as they become considerably more strict in their lending rules.

What is meant by federal funds?

Any money received directly from the federal government is considered a federal fund and is listed as such in the "Detail of Appropriations" section of the governor's budget. Any organization or department may use these monies however they see fit. The interest paid on a federal funds overnight loan between financial institutions is known as "federal funds," and it is used to refer to money that commercial banks and other financial institutions have on deposit with a regional Federal Reserve System.

How Does the Federal Funds Rate Work?

The federal funds rate is the interest rate that banks charge one another when lending or borrowing excess reserves overnight. 8 According to the legislation, banks must maintain a minimum amount of reserves in relation to their deposits. This reserve requirement is stored at a Federal Reserve Bank.

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