Limited Reserves
Under limited reserves, the Central Banks changes the ___________________ to change interest rates to bring the economy back to full employment.
What is DR, RR, or open market operations?
Under ample reserves, the Central Banks changes the ___________________ to change interest rates to bring the economy back to full employment.
What is adminstrated rates?
OR
What is open market operations?
True or false. Money is a unit of account.
Bonus question! Money is also...
This is something the bank owes.
What is liabilities?
If an economy is in a recession, the Central Bank will use ________________ monetary policy to bring the economic back to full employment.
What is expansionary?
True or false. One of the policy tools is change IOR.
What is false?
If the Central Bank wants to increase interest rate, one policy tool they could use is...
OR
What is increase IOR?
OR
What is sell securities?
M1 money supply is...
If there is a withdrawal of $500, how much do assets and liabilities change by?
What is $500?
Bonus question: Where does a bank get withdrawal money from?
In this scenario, is there crowding out?
The government decreases spending and increases taxes.
What is no?
Bonus question: Is this a surplus or a deficit?
If the Central Bank wants to decrease the interest rate, one policy tool they could use is...
What is decrease reserve requirement? OR What is decrease discount rate? OR What is buy securities?
Bonus question: Do these policy tools increase or decrease money supply?
If the Central Bank buy securities, the interest rate will ________________(increase/decrease), which will _______________(increase/decrease) investment.
What is decrease AND increase?
Bonus question: What will also happen to economic growth?
When a loan is made, the money transfer from M_ to M_.
What is M0 AND M1?
If someone deposited $300 and the reserve requirement is 25%, what is the change in demand deposits, required reserves, and excess reserves?
What is $300 AND $75 AND $225?
Bonus question: how much money can be loaned out?
If the economy was in a inflationary gap, the Central Bank would use ______________ monetary policy. This will _________________ (increase/decrease) interest rates by ____________ (increase/decrease) IOR. This will lead to _____________(more/less) productivity and ____________ (increase/decrease) economic growth.
What is contractionary AND increase AND increase AND less AND decrease?
New money is created with deposited money is __________(ed) out, and then the ________ is deposited. This money is then again ________(ed) out from the reserves.
What is loan AND loan AND loan?
Match the following numbers with the discount rate, federal funds rate, and interest on reserves in an ample reserves system.
a. 12%
b. 6%
c. 15%
If the inital change in MS was a deposit, new money is ______(will/will not) include the initial deposit.
What is will?
Bonus question: If the initial deposit was 500 and the reserve requirement is 10%, what is the total new money?
If the bank needs to borrow money, they will use _____________ rate and _______________ rate to see whether to borrow from the central bank or other banks.
What is DR and FFR?
Bonus question: The FFR is bounded by the _______.
If the economy was in a inflationary gap, the Central Bank would want to ____________ (increase/decrease) MS to _____________ (increase/decrease) interest rates so that GDP _____________ (increases/decreases) to bring the economy back to full employment.
What is increase AND decrease AND decrease?
Bonus question: Will this shift the SRAS or AD in the AD/AS graph?
What is $500?
Bonus question: What type of monetary policy is the central bank using?
If the economy was in a ________ gap, the Central Bank would use expansionary monetary policy. This will _________________ (increase/decrease) interest rates by ____________ (increase/decrease) IOR. This will lead to _____________(more/less) productivity and ____________ (increase/decrease) economic growth.
What is recessionary AND decrease AND decrease AND more AND increase?
If the nominal interest rate is 10% with an expected inflation of 5%, does the real interest rate _________(increase/decrease) when actual inflation is greater than expected?
What is decrease?
Bonus question: What would the real interest rate if the actual inflation is 7%? Would this help borrowers or savers?
The bank had $2000 deposits, and a reserve requirement of 10%, how much new money was created?
What is $18,000?
The PPC curve shifted to the right because the central bank used __________________ monetary policy.
What is expansionary?