What tools does the Fed have to pursue monetary policy?


When describing how banks create mony, answer the following question:

1)  Show how each of the following would initially affect a bank’s assets and liabilities.

  • Someone makes a $10,000 deposit into a checking account.
  • A bank makes a loan of $1,000 by establishing a checking account for $1,000
  • The loan described above is spent.
  • A bank must write off a loan because the borrower defaults.


When summarizing the Fed’s tools of monetary policy, answer the following question:

2) What tools does the Fed have to pursue monetary policy? Which tool does it use the most?


3)  Suppose the money supply is currently $400 billion and the Fed wishes to increase it by $100 billion.

  • Given a required reserve ration of 0.25, what should it do?
  • If it decided to change the money supply by changing the required reserve ratio, what change should it make?  Why may the Fed be reluctant to change the reserve requirement

Are you looking for a similar paper or any other quality academic essay? Then look no further. Our research paper writing service is what you require. Our team of experienced writers is on standby to deliver to you an original paper as per your specified instructions with zero plagiarism guaranteed. This is the perfect way you can prepare your own unique academic paper and score the grades you deserve.

Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.