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

Last updated about 1 year ago

3 questions

1

1

1

Question 1

1.

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

(FED) Buy Bonds
(FED) Sell Bonds
Influence an Increase in the FFR

Question 2

2.

Sort the following into expansionary and contractionary monetary policy.

Increase the DR
Increase the RR
Decrease the DR

Question 3

3.

Increase the DR

Decrease the RR

Increase the RR

Influence a Decrease in the FFR

Decrease the DR

Increase the Money Supply

Decrease the Money Supply

(FED) Less Buying OMOs

Decrease the RR

Influence an Increase in the FFR

(FED) More Buying OMOs

Influence a Decrease in the FFR

Expansionary Monetary Policy

Contractionary Monetary Policy

Sort into the appropriate category

Qd of Money < Qs of Money

The economy is booming and more households are finding employment

Deflation hits the US economy

The Fed influences an increase in the Federal Funds Rate.

The Fed does more purchasing OMOs

Credit cards increase their average percentage rates (APRs)

Banks raise ATM fees

The Fed lowers the reserve requirement.

Nominal Interest Rates Fall

Qd of Money > Qs of Money

Nominal Interest Rates Rise

The Fed increases the discount rate

Supply of Money Increases

Supply of Money Decreases

Demand of Money Increases

Demand of Money Decreases

Shortage of Money

Surplus of Money