Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:NH
for decrease) in Figure 38.4.
12. Circle the correct symbol ( T for increase,
X Figure 38.4
Fed Actions and Their Effects
Bank Reserves
Money Supply Fed Funds Rate
Federal Reserve Action
A. Sold Treasury securities on the
open market
B. Bought Treasury securities on the
open market
C. Raised the discount rate
D. Lowered the discount rate
E. Raised the reserve requirement
F. Lowered the reserve requirement
13. Indicate in the table in Figure 38.5 how the Federal Reserve could use each of the three monetary
policy tools to pursue an expansionary policy and a contractionary policy.
Figure 38.5
Tools of Monetary Policy
Monetary Policy
Expansionary Policy
Contractionary Policy
A. Open market operations
B. Discount rate
C. Reserve requirements
14. Why do banks hold excess reserves, which pay no interest?
Advanced Placement Economics Macroeconomics: Student Activities O National Council on Economic Education, New York, N.Y.
203
lacr
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