The Fed and Monetary Policy

Front

What is the formula for the money multiplier?

Back

1/Required Reserve Ratio

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 Fed needs to follow contractionary monetary policy, what will happen to interest rates?

Back

they will increase

Front

If the RRR is 10%, the money multiplier will be

Back

10

Front

If the RRR is 25%, the money multiplier will be

Back

4

Front

If the RRR is 5%, the money multiplier will be

Back

20

Front

It is M1 + small time deposits

Back

M2

Front

If the RRR is 1%, the money multiplier will

Back

100

Front

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

Back

discount rate

Front

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

Back

Federal Funds Rate