1. What are the 3 tools of monetary policy?
2. The FED is facing a problem of inflation. What policy should be used? How would each of the tools at the FED’s disposal be used? Be Specific.
3. The FED is facing a problem of unemployment. What policy should be used? How would each of the tools at the FED’s disposal be used? Be Specific
4. Bank deposits: 500 million. Required Reserve Ratio: .25
Use the monetary policy equations provided to calculate.
a. Monetary Multiplier =
b. Required Reserves =
c. Excess Reserves =
d. Potential Money Created=
5. If a student deposits a $600 tax refund and the required reserve ratio changes to .2, then how much additional money could be potentially created in the economy?