Question description

 

 

 

• Go to http://sffed-education.org/chairman. Use the Learn More button and review the tight  (contractionary) and easy (expansionary) tools of the Fed as well as the use of each. Briefly examine the Economic Dictionary and the Policy in Depth features.
• Now play the game! You are the Fed Chairperson! You begin with 16 quarters, 4 years, then your job is up for review. You begin with rates at 4.5, inflation at  2.14% and unemployment at 4.75%.
• Make decisions on interest rates for the 16 quarters. Summarize the changes you chose and explain your results. Do you still have a job? Why or why not?

• Complete the following from the textbook:

• Chapter 4: E2

  2. As the executive of a bank or thrift institution you are faced with

  an intense seasonal demand for loans. Assuming that your loanable

  funds are inadequate to take care of the demand, how might your

  Reserve Bank help you with this problem?

• Chapter 5: P1

  P1 1. A new bank has vault cash of $1 million and $5 million in deposits

  held at its Federal Reserve District Bank.

  a. If the required reserves ratio is 8 percent, what dollar amount

  of deposits can the bank have?

  b. If the bank holds $65 million in deposits and currently holds

  bank reserves such that excess reserves are zero, what

  required reserves ratio is implied?

   

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  CH 5: P6

  6. Assume that banks must hold a 2 percent reserve percentage

  against transaction account balances up to and including $40 million.

  For transaction accounts above $40 million, the required reserve

  percentage is 8 percent. Also assume that Dell National Bank has

  transaction account balances of $200 million.

  a. Calculate the dollar amount of required reserves that Dell

  National Bank must hold.

  b. What percentage of Dell’s total transaction account balance

  must be held in the form of required reserves?

   

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