Inflation, Fed Reserve and Banking

Too much money chasing too few goods

Interest rate that banks pay to borrow from the Fed

Interest rates rise and spending on houses falls

Jobs of the Federal Reserve

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

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

We try to buy more than the economy can produce

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

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

Producers raise prices to cover higher resource costs

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

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

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

Why would the Fed want to decrease the money supply?

What is the only reason banks borrow from the Fed?

The money multiplier

Too much demand, not enough goods results in

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

Oil prices rise quickly

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

Cost of Borrowing Money

Reserve requirement, discount rate, open market operations

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

The Fed can create new money through

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

The dollar buys less, purchasing power is down