Problem 1
Explain the relationship between the terms in each of these pairs. a. central bank Federal Reserve System b. monetary currency c. Board of Governors Federal Open Market Committee
Problem 1
Use each of the three terms below in a sentence that illustrates the meaning of the term. a. check clearing b. bank holding c. required reserve company ratio
Problem 1
Explain the difference between the terms in each of these pairs. a. monetary policy monetarism b. easy-money policy tight-money policy c. discount rate prime rate
Problem 2
Why are bank exams an important way for the Fed to help create a sound banking system?
Problem 2
How should a contractionary monetary policy affect interest rates and the rate of inflation? Why?
Problem 3
What is the relationship between the required reserve ratio and the deposit multiplier formula?
Problem 3
How should an expansionary monetary policy affect interest rates and the unemployment rate? Why?
Problem 3
Why does rational expectations theory oppose most discretionary fiscal and monetary policy?
Problem 4
How does the Fed's check-clearing service help the banking system?
Problem 4
How does the Fed use open market operations as a monetary policy tool?
