ECON 272
Out of Class Questions on the FED and Monetary Policy
1. If the FED sold bonds to banks - is it trying to increase or decrease the money supply? Explain - discuss excess reserves in your answer.
2. If the FED increased the discount rate - is it trying to increase or decrease the money supply? Explain.
3. If the FED decreased the required reserve ratio - is it trying to increase or decrease the money supply? Explain - discuss excess reserves in your answer.
4. If the FED lowered the threshold such that more deposits are exempt from the required reserve ratio - is it trying to increase or decrease the money supply? Explain - discuss excess reserves in your answer.