monetary policy review. draw a graph of the money market showing an increase in the money supply...

Monetary Policy ReviewMonetary Policy Review

Draw a graph of the money Draw a graph of the money market showing an increase market showing an increase

in the money supplyin the money supplyName 3 things the FED can do to Name 3 things the FED can do to

increase the money supply.increase the money supply.

When would the FED use this strategy?When would the FED use this strategy?

What are the 2 names for this policy?What are the 2 names for this policy?

Draw a graph of the money Draw a graph of the money market showing a decrease market showing a decrease

in the money supplyin the money supplyName 3 things the FED can do to Name 3 things the FED can do to

decrease the money supply.decrease the money supply.

When would the FED use this strategy?When would the FED use this strategy?

What are the 2 names for this policy?What are the 2 names for this policy?

Draw a graph of the money market Draw a graph of the money market and the effect on AD/AS. What and the effect on AD/AS. What

happens to P, GDP, and happens to P, GDP, and unemployment?unemployment?

While at full employment, the FED sells While at full employment, the FED sells bonds on the open market.bonds on the open market.



While at full employment, the FED lowers While at full employment, the FED lowers the reserve ratio.the reserve ratio.



During a period of inflation, the FED raises During a period of inflation, the FED raises the discount rate.the discount rate.



While at full employment, the FED buys While at full employment, the FED buys bonds on the open market.bonds on the open market.



During a period of inflation, the FED raises During a period of inflation, the FED raises the reserve ratio.the reserve ratio.

Draw a graph of the money Draw a graph of the money market and the effect on AD/AS. market and the effect on AD/AS. What happens to P, GDP, and What happens to P, GDP, and

unemployment?unemployment?

During a recession, the FED lowers the During a recession, the FED lowers the discount rate.discount rate.

The FED increases the money The FED increases the money supplysupply

What happens to the interest rate?What happens to the interest rate?

What happens to the value of the dollar in What happens to the value of the dollar in the foreign exchange market?the foreign exchange market?

Why is this the case?Why is this the case?

The FED decreases the money The FED decreases the money supplysupply

What happens to the interest rate?What happens to the interest rate?

What happens to the value of the dollar in What happens to the value of the dollar in the foreign exchange market?the foreign exchange market?

Why is this the case?Why is this the case?

Draw a graph of the loanable Draw a graph of the loanable funds market. What happens to funds market. What happens to

the real interest rate?the real interest rate?

The government eliminates the tax people The government eliminates the tax people pay on interest from their savings pay on interest from their savings

accounts.accounts.

Draw a graph of the loanable Draw a graph of the loanable funds market. What happens to funds market. What happens to

the real interest rate?the real interest rate?

The government increases the size of the The government increases the size of the budget deficit.budget deficit.

monetary policy review. draw a graph of the money market showing an increase in the money supply...

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