The Fed, Monetary Policy, and Money Multiplier Practice

Front

The formula for the money multiplier is

Back

1/Required Reserve Ratio (R)

Front

If the Fed wants to prevent or end a recession, which of the following policies would be appropriate? raise the discount rate, raise the reserve requirement, buy bonds, sell bonds

Back

buy bonds

Front

If the Required Reserve Ratio is 10%, the money multiplier will be

Back

10

Front

If the Required Reserve Ratio is 25%, the money multiplier will be

Back

4

Front

If the Required Reserve Ratio is 5%, the money multiplier will be

Back

20

Front

If the Required Reserve Ratio is 1%, the money multiplier will

Back

100

Front

The interest rate that the Fed charges member banks to borrow money for short term loans is called the

Back

discount rate

Front

The interest rate that banks charge each other for short term loans is called the

Back

Federal Funds Rate

Front

On a bank's t-account, demand deposits will go in this column:

Back

liabilities

Front

This tool of monetary policy refers to the buying and selling of government bonds.

Back

open market operations