Transcript Monetary policy review powerpoint

Monetary Policy Review
Draw a graph of the money
market showing an increase
in the money supply
Name 3 things the FED can do to
increase the money supply.
When would the FED use this strategy?
What are the 2 names for this policy?
Draw a graph of the money
market showing a decrease
in the money supply
Name 3 things the FED can do to
decrease the money supply.
When would the FED use this strategy?
What are the 2 names for this policy?
Draw a graph of the money market
and the effect on AD/AS. What
happens to P, GDP, and
unemployment?
While at full employment, the FED sells
bonds on the open market.
Draw a graph of the money market
and the effect on AD/AS. What
happens to P, GDP, and
unemployment?
While at full employment, the FED lowers
the reserve ratio.
Draw a graph of the money market
and the effect on AD/AS. What
happens to P, GDP, and
unemployment?
During a period of inflation, the FED raises
the discount rate.
Draw a graph of the money market
and the effect on AD/AS. What
happens to P, GDP, and
unemployment?
While at full employment, the FED buys
bonds on the open market.
Draw a graph of the money market
and the effect on AD/AS. What
happens to P, GDP, and
unemployment?
During a period of inflation, the FED raises
the reserve ratio.
Draw a graph of the money
market and the effect on AD/AS.
What happens to P, GDP, and
unemployment?
During a recession, the FED lowers the
discount rate.
The FED increases the money
supply
What happens to the interest rate?
What happens to the value of the dollar in
the foreign exchange market?
Why is this the case?
The FED decreases the money
supply
What happens to the interest rate?
What happens to the value of the dollar in
the foreign exchange market?
Why is this the case?
Draw a graph of the loanable
funds market. What happens to
the real interest rate?
The government eliminates the tax people
pay on interest from their savings
accounts.
Draw a graph of the loanable
funds market. What happens to
the real interest rate?
The government increases the size of the
budget deficit.