The Potential Money Multiplier
Read the scenario below, and then answer questions 1 and 2. Refer to this week’s readings in the text, if needed.
Scenario: Bank A has an increase in deposits (or excess reserves) of $100M and the reserve requirement is 10% with other banks not holding reserves beyond the requirement.
How much money can Bank A create by making loans?
How much money can the banking system as a whole create? (Show calculation).
Current Monetary Policy
After reading the Week Five required readings, address these questions in your post
What are the current monetary policy goals?
How has the Fed attempted to meet some of these goals? What have been the outcomes?
Do you agree or disagree with the Fed taking action to intervene when the economy is not well-functioning? Why or why not?
.
The Potential Money Multiplier Read the scenario below, and then a.docx
1. The Potential Money Multiplier
Read the scenario below, and then answer questions 1 and 2.
Refer to this week’s readings in the text, if needed.
Scenario: Bank A has an increase in deposits (or excess
reserves) of $100M and the reserve requirement is 10% with
other banks not holding reserves beyond the requirement.
How much money can Bank A create by making loans?
How much money can the banking system as a whole create?
(Show calculation).
Current Monetary Policy
After reading the Week Five required readings, address these
questions in your post
What are the current monetary policy goals?
How has the Fed attempted to meet some of these goals? What
have been the outcomes?
Do you agree or disagree with the Fed taking action to intervene
when the economy is not well-functioning? Why or why not?
