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The Old System-Tools of FED in a Limited Reserve System

Last updated 12 months ago

3 questions

1

1

1

Question 1

1.

Sort the following tools into increasing and decreasing the money supply.

Influence an Increase in the FFR
Increase the DR
(FED) Buy Bonds
(FED) Sell Bonds
Decrease the DR
Influence a Decrease in the FFR
Decrease the RR
Increase the RR

Increase the Money Supply
Decrease the Money Supply

Question 2

2.

Sort the following into expansionary and contractionary monetary policy.

(FED) Less Buying OMOs
Influence a Decrease in the FFR
Influence an Increase in the FFR
(FED) More Buying OMOs
Increase the RR
Decrease the RR
Increase the DR
Decrease the DR

Expansionary Monetary Policy
Contractionary Monetary Policy

Question 3

3.

Sort into the appropriate category

Qd of Money < Qs of Money
Banks raise ATM fees
Nominal Interest Rates Rise
Nominal Interest Rates Fall
Qd of Money > Qs of Money
Credit cards increase their average percentage rates (APRs)
The Fed influences an increase in the Federal Funds Rate.
The Fed lowers the reserve requirement.
The Fed does more purchasing OMOs
Deflation hits the US economy
The Fed increases the discount rate
The economy is booming and more households are finding employment

Supply of Money Increases
Supply of Money Decreases
Demand of Money Increases
Demand of Money Decreases
Shortage of Money
Surplus of Money