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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 an Increase in the FFR
(FED) Sell Bonds
Decrease the RR

Question 2

2.

Sort the following into expansionary and contractionary monetary policy.

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

Question 3

3.

Decrease the DR

(FED) Buy Bonds

Increase the DR

Influence a Decrease in the FFR

Increase the RR

Increase the Money Supply

Decrease the Money Supply

(FED) More Buying OMOs

Increase the RR

Increase the DR

Influence a Decrease in the FFR

Decrease the DR

Expansionary Monetary Policy

Contractionary Monetary Policy

Sort into the appropriate category

Nominal Interest Rates Fall

Qd of Money > Qs of Money

The Fed increases the discount rate

The Fed lowers the reserve requirement.

Qd of Money < Qs of Money

Banks raise ATM fees

The Fed influences an increase in the Federal Funds Rate.

The Fed does more purchasing OMOs

Credit cards increase their average percentage rates (APRs)

The economy is booming and more households are finding employment

Deflation hits the US economy

Nominal Interest Rates Rise

Supply of Money Increases

Supply of Money Decreases

Demand of Money Increases

Demand of Money Decreases

Shortage of Money

Surplus of Money