Are you smarter than a Fed Chairman?
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Are you smarter than a
Fed Chairman?
What are the 2 main components of M1?
CashChecking Accounts(Demand Deposits)
You deposit a $100 bill into your checking account.
What immediate effect would this have on the Money Supply?
No effect
You deposit $10,000 in a checking account when the Reserve Requirement is 20%. How much must your bank place in reserves?
$2,000
TIME Magazine said I was . . . . What?
The most powerful nerd on the planet!
The Reserve Requirement is 10%.What is the money multiplier?
10
The Reserve Requirement is 20%.You deposit $10,000 in your bank checking account. By how much might the money supply increase?
$40,000
The supply of money increases while demand remains unchanged.
What would happen to interest rates?
Fall (decrease)
True or False:Since my high school did not offer Calculus, I learned it on my own.
True
The Fed lowers the Reserve Requirement.
What would this do to the Money Supply?
Increase
The economy is in a recession.Should the Fed implement a
contractionary policy or expansionary policy?
Expansionary
The Fed wants to implement a contractionary policy.
Should it increase or decrease interest rates?
Increase
What did I score on the SAT?
(back in the days when it only had 2 sections, not 3)
1590out of 1600
Banks that borrow from the Fed pay what rate of interest?
Discount Rate
Who is in charge of Open Market Operations?
FOMCFederal Open Market Committee
If the FOMC wants to increase the Money Supply, what would it do?
Buy government securities
Where did I earn my Ph.D?
M.I.T.
It’s no Stanford, but it was the best I could do.
If the FOMC sells government securities, what would happen to the
federal funds rate?
Increase
The money people save that is available to be borrowed is known as
the _______ _________ market.
Loanable Funds
If the government increases its borrowing, what would probably
happen to the level of interest rates?
Increase
At which university was I chairman of the
Economics Department?
Princeton
If people’s savings decline, what would probably happen to the level of
interest rates?
Increase
What would a decrease in interest rates do to the overall level of investment in the economy?
Make it increase
What would an increase in investment do to the economic growth rate
of the economy?
Make it increase
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