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.