Inflation, Fed Reserve and Banking

Banks must keep a % of depositor's money on hand

Too much money chasing too few goods

The money multiplier

Reserve requirement, discount rate, open market operations

When the reserve requirement goes up, the expansion of the money supply

The Fed can create new money through

Too much demand, not enough goods results in

Interest rate that banks pay to borrow from the Fed

What is the only reason banks borrow from the Fed?

Factory orders are down and people are getting laid off...what should the Fed do?

Prices are stable, GDP growing at 3%, what should the Fed do?

If someone puts $1,000 in the bank and the RR is 10%, what will be the EXCESS reserves?

The CPI is up 6%. What should the Fed do?

Price of cars are going up, what should the Fed do?

The Fed thinks that we do not know how to budget our money, what will they do?

We try to buy more than the economy can produce

Jobs of the Federal Reserve

Oil prices rise quickly

The dollar buys less, purchasing power is down

When the Fed sells bonds in the market, they are pursuing a(n)

Interest rates rise and spending on houses falls

If banks have more money (loanable funds) the interest rate will

Stagflation! High Unemployment and Inflation, what should the Fed do?

Producers raise prices to cover higher resource costs

Cost of Borrowing Money

Why would the Fed want to decrease the money supply?