Problem: US paper currency is made with several features that are difficult to counterfeit, including a security thread, color shifting ink, microprinting, a portrait, a watermark and a fine line printing pattern. As duplication technology continually improves and more and more counterfeits are circulated, what will happen to the following?
a) The value of money circulated
b) The volume of cashless transactions
c) The amount of money the Treasury spends to introduce additional security features.
The table below gives the Federal Funds rate target at the end of each year shown. Using these figures, describe how the monetary policy directions changed from 2001-2006. Year Federal Funds Target Rate
2001 1.75%
2002 1.25%
2003 1.00%
2004 1.75%
2005 4.25%
2006 5.25%
(Hint: to learn more, access the Federal Open Market Committee's decisions on the Federal Reserve's web site at www.federalreserve.gov.)