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Monetary Policy
Question
What is open market operation?
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Slide 1:
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Economie
Tertiary Education
This lesson contains
18 slides
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interactive quizzes
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Items in this lesson
Question
What is open market operation?
Slide 1 - Slide
Answer here
Slide 2 - Mind map
Chapter 16.1: Monetary Policy
Pages 490-497
Slide 3 - Slide
Objectives
Identify the key terms
Analyze the Fed's monetary tools
Discuss the effect of expansionary and contractionary policies
Slide 4 - Slide
The federal funds
rate (FFR) is the interest rate that banks
charge one another to
borrow money.
Open market
operations are the sales and purchase of
federal government
securities.
Slide 5 - Slide
The discount rate is
the interest rate that the Fed charges when it lends money to other banks.
The prime rate is
the interest rate that banks charge their best
customers.
Slide 6 - Slide
the interest rate that
banks charge their best
customers.
the interest rate that the Fed charges when it lends money to other banks.
the interest rate that banks charge one another to borrow money.
Federal Fund Reserve
Discount rate
Prime rate
Slide 7 - Drag question
Slide 8 - Slide
Why is it inaccurate to say that the Fed sets
the federal funds rate?
Slide 9 - Open question
What is the relationship between the discount
rate and the prime rate?
Slide 10 - Mind map
Answer
(The prime rate tends to rise and fall as the discount rate does,
because banks charge their customers more than it costs them to borrow money from the Fed.)
Slide 11 - Slide
1.How should a contractionary monetary policy affect interest rates
and the rate of inflation? Why?
2.How should an expansionary monetary policy affect interest rates
and the unemployment rate? Why?
3.How does the Fed use open market operations as a monetary policy
tool?
Slide 12 - Slide
Answer here
Slide 13 - Mind map
Answer
1. Interest rates will rise, inflation rate will fall.
Higher interest rates discourage lending, which
will decrease aggregate demand, slow GDP
growth, and lower general price level.
Slide 14 - Slide
2.Interest rates will fall, unemployment will fall.
Lower interest rates encourage lending, which
will increase spending and investment, increase
aggregate demand, and speed GDP growth.
Slide 15 - Slide
3.By buying and selling government securities the
Fed affects the amount of reserves in the banking system, which in turn determines whether
the money supply will expand or contract
Slide 16 - Slide
___________________ is a plan to increase the amount of money in
circulation.
A
Tight money
B
Expansionary monetary policy
C
Monetary policy
D
Contractionary monetary policy
Slide 17 - Quiz
Write the main points of the lesson.
Slide 18 - Mind map
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