Monetary Policy Review

Front

The FED wants to contract the money supply, should they: Sell Bonds, Buy Bonds

Back

Sell Bonds

Front

The FED wants to expand the money supply, they should: RAISE Discount Rate, RAISE interest on Reserve Balances, Push Federal Funds Rate UP, LOWER Discount Rate, DECREASE Interest on Reserve Balances, Push Federal Funds Rate DOWN

Back

LOWER Discount Rate, DECREASE Interest on Reserve Balances, Push Federal Funds Rate DOWN

Front

Is raising the reserve requirement?

Back

Contractionary policy

Front

The Unemployment rate is at 37%.  Which action might the FED take?

Back

Buy Bonds (securities)

Front

A sale of bonds/securities by the FED could be illustrated on a money supply/demand graph (money market graph) by

Back

Shifting the money supply to the left indicating an increase in interest rates.