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The Old System-Tools of FED in a Limited Reserve System
By Michael Burbine
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Last updated over 1 year ago
3 questions
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Question 1
1.
Question 2
2.
Question 3
3.
Sort the following tools into increasing and decreasing the money supply.
Increase the DR
Influence an Increase in the FFR
Influence a Decrease in the FFR
Increase the RR
(FED) Buy Bonds
(FED) Sell Bonds
Decrease the DR
Decrease the RR
Increase the Money Supply
Decrease the Money Supply
Sort the following into expansionary and contractionary monetary policy.
(FED) More Buying OMOs
Decrease the DR
Influence a Decrease in the FFR
Increase the RR
Influence an Increase in the FFR
Increase the DR
Decrease the RR
(FED) Less Buying OMOs
Expansionary Monetary Policy
Contractionary Monetary Policy
Sort into the appropriate category
The Fed increases the discount rate
Qd of Money < Qs of Money
Credit cards increase their average percentage rates (APRs)
The Fed lowers the reserve requirement.
The economy is booming and more households are finding employment
Banks raise ATM fees
Nominal Interest Rates Rise
Nominal Interest Rates Fall
Qd of Money > Qs of Money
The Fed influences an increase in the Federal Funds Rate.
Deflation hits the US economy
The Fed does more purchasing OMOs
Supply of Money Increases
Supply of Money Decreases
Demand of Money Increases
Demand of Money Decreases
Shortage of Money
Surplus of Money