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    FIN243 Money and Banking Chapter 15 The Money Supply Process MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The three players in the money supply process include A) banks, depositors, and the central bank. B) banks, depositors, and the U.S. Treasury. C) banks, depositors, and borrowers. D) banks, borrowers, and the central bank. 2) When banks borrow money from the Federal Reserve, these funds are called A) federal funds. B) discount loans

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    The Money Supply Process 1. The three players in the money supply process are the central bank, banks (depository institutions), and depositors. 2. Four items in the Fed's balance sheet are essential to our understanding of the money supply process: the two liability items, currency in circulation and reserves, which together make up the monetary base, and the two asset

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    2.1. Economic Policy Economic policy refers to the actions that are intended to control or influence the behaviour of the economy by governments. Such as the systems for setting levels of taxation, the money supply, government budgets and interest rates as well as the national ownership, labour market, and many other areas of government interventions into the economy. (Wikipedia, 2014) There are the three important economic policies goals that are generally accepted which are economic growth, price

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    Cash Reserve Ratio

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    and money supply through three main tools. To implement the task of controlling the money supply, the Fed may implement a change in reserve requirements, a change in discount rate or make open-market operations.(Cloutier, n.d.) The cash reserve ratio is the percentage of reserves a commercial bank is required to hold against deposits. If regulators decide to lower the cash reserve ratio, the commercial banks will be able to lend more thus increasing the supply of money or the amount of money in the

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    Federal Reserve can increase the money supply by lowering the required reserve requirements, buying government securities in the open market operations, and by lowering the discount rate. To increase the money supply, the Federal Reserve has to lower interest rates through the money market. This would cause an encouragement to businesses to do more investment spending, which would shift the aggregate demand curve outwards. In other words, the Fed can increase the money supply by lowering interest rates

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    rates and setting interest rates. Economic policy comprises three main subjects, supply-side economics, demand-side economics, and monetary policy. The first main economic policy is Supply-Side. Supply-Side economics are policies that stimulate the output and lower unemployment by increasing production rather than demand. It gained its support in 1970 and became the official mark of President Reagan’s administration. Supply-side and demand-side share the same goal of increasing production and decreasing

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    a fixed quantity of Gold, Michael (2008). Advantages i. It controls or acts as a limit for government or central banks in the issuance of paper currency this result in price stability. Inflation is low under gold standard as the money supply should match the gold supply, Michael (2008). ii. The international trade has some assurance that the exchange rates are kept at a fixed rate and thus reducing uncertainty in international trade. iii. It does not allow savers to earn a return below the inflation

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    Fiscal Policy Definition

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    federal budget is funded in Federal Income and Taxes. The second tool is government spending. That includes subsidies, transfer payments including welfare programs, public works projects and government salaries. Whoever receives the funds has more money to spend. That increases demand and economic

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    after the Stock Market Crash there were two acts entering into force. The first one, in 1932, made the Federal Reserve more powerful in control of the money supply. The second wanted to make safer the banking system. In fact after this date banks cannot be commercial and investment banks at the same time, also the insurance services cannot be supply by banks. The Glass-Steagall act prohibited to banks to issue, sell or distributed every security they wanted. A new order for banking was a result of

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    Patrick O’Donnell Econ Essay Throughout history and especially economics, there has been a broad spectrum of how to assess a economy and manage the money supply, price level, inflation, etc. Keynesian, Classical, and Monetarist perspectives have been present through history. There are three basic viewpoints of economics and each vary with different views and policies. They differ in the aspects of both monetary policy and fiscal policy. A typical person in each of their views might have select

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    decisions known as money illusion. The last and most costly consequence of inflation is the significant impact that will occur with hyperinflation. Hyperinflation is caused by significant increase of inflation rates. This can cause major political and social

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    Even when we are in debt they print more money. The more there is of something, the less value it has. This is where inflation comes from. It also encourages banks to make loans to people that they think have a better shot of not paying. It is a system that was designed by bankers for the benefit

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    withstand the initial economic recession. Soon, the bank closures began to occur almost inevitably and the US economy thus underwent a period of contraction in the money supply. As neoclassical economists have frequently attributed the level of money circulating in an economy to the rate of inflation, the result of a fall in the supply of money was that the purchasing power of consumers fell. Purchasing power and consumption fall together, and as consumption is one of the components in calculating aggregate

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    Chapter 17 enlighten monetary targets and goals. The Fed was ineffective in the 1980s because it was engaged in pro-cyclical monetary policies, that is, expanding the money supply and lowering interest rates during expansions and constricting the money supply and raising interest rates during recession, the Fed could have done the opposite to be effective. Also the practice of open market operation was absent, and it did not realize the damage it was toying with rr after new dealers gave it control

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    programs and abilities to regulate the United States economy. On of which is the fiscal policy which allows government to raise and spend money. This gives government the ability to keep a steady balance in the economy. Another way the federal government can regulate money is by the monetary policy, which gives the government the ability to manipulate the money supply. As long as this power isn 't abused it can help restore order in the economy. Use what you’ve learned about the structure of Russia’s

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    THE FEDERAL RESERVE CASE STUDY MEMORANDUM To: New Employees Date: 10/19/2015 From: Sandra Flores (Consultant) Subject: Training on the basic fundamentals of the U.S. financial system. Dear new employees; The purpose of this memo is to inform you about how banking and financial system have been improving and the different conflicts that monetary policy and the Federal Reserve had in managing and controlling the economy of the country. Knowing this basic fundamentals of the U.S. financial

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    Macroeconomics is the level and branch of economics that helps find studies of how a country performs, detailing the structure and it also gives insight to indicators that reflect how the economy is functioning overall. Macroeconomics was created in the idea of being able to measure the health of the whole economy and be used as a guide to the government policies to implement and fix those problems. The United States and other countries governments use models that help them analyze and determine

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    Preventing Minimum Wage Speech Overview: General Goal: To persuade - to create, change or reinforce attitudes, values, beliefs and/or behaviors. Specific Goal: By the end of this speech my audience will believe that minimum wage in America should be raised all around the nation. Introduction: (This is where you start talking) Attention Grabber: How many of us have worked a job that pays $7.25 - $7.50 a hour? Most minimum wage workers are under the age of 25. Relevance Statement: Most of us

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    be used as the national currency?” If so, then the people who believed it should needed to form organizations and take charge to make silver the national currency. People are worried that if silver becomes our national currency then they will lose money because silver does not equal up to the amount that gold it worth. They are not just going to ask the richer people or the business man, but they are asking everyone for their opinion. They see everyone as equals. This way, there is poorer people

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    Saving Money Speech

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    friends to support her financially. If she knew she will face this unexpected situation, she will definitely save some money when she was financially stable in the first place. But, now it is too late because she had to starve every day and walk from place to place looking for a new job as she did not have any single cent left in her bank account. II. I never thought that saving money is crucial until I came across this story. III. Even though

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