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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.

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

Question 2

2.

Sort the following into expansionary and contractionary monetary policy.

(FED) More Buying OMOs
Decrease the DR
Influence a Decrease in the FFR

Question 3

3.

Increase the DR

Decrease the RR

Influence an Increase in the FFR

Decrease the DR

(FED) Buy Bonds

Increase the Money Supply

Decrease the Money Supply

Influence an Increase in the FFR

(FED) Less Buying OMOs

Increase the DR

Increase the RR

Decrease the RR

Expansionary Monetary Policy

Contractionary Monetary Policy

Sort into the appropriate category

The Fed lowers the reserve requirement.

Nominal Interest Rates Fall

Credit cards increase their average percentage rates (APRs)

Qd of Money < Qs of Money

Deflation hits the US economy

The Fed increases the discount rate

The Fed does more purchasing OMOs

Nominal Interest Rates Rise

The economy is booming and more households are finding employment

The Fed influences an increase in the Federal Funds Rate.

Banks raise ATM fees

Qd of Money > Qs of Money

Supply of Money Increases

Supply of Money Decreases

Demand of Money Increases

Demand of Money Decreases

Shortage of Money

Surplus of Money