Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts...
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![Page 1: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/1.jpg)
Are you smarter than a
Fed Chairman?
![Page 2: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/2.jpg)
What are the 2 main components of M1?
CashChecking Accounts(Demand Deposits)
![Page 3: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/3.jpg)
You deposit a $100 bill into your checking account.
What immediate effect would this have on the Money Supply?
No effect
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You deposit $10,000 in a checking account when the Reserve Requirement is 20%. How much must your bank place in reserves?
$2,000
![Page 5: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/5.jpg)
TIME Magazine said I was . . . . What?
The most powerful nerd on the planet!
![Page 6: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/6.jpg)
The Reserve Requirement is 10%.What is the money multiplier?
10
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The Reserve Requirement is 20%.You deposit $10,000 in your bank checking account. By how much might the money supply increase?
$40,000
![Page 8: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/8.jpg)
The supply of money increases while demand remains unchanged.
What would happen to interest rates?
Fall (decrease)
![Page 9: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/9.jpg)
True or False:Since my high school did not offer Calculus, I learned it on my own.
True
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The Fed lowers the Reserve Requirement.
What would this do to the Money Supply?
Increase
![Page 11: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/11.jpg)
The economy is in a recession.Should the Fed implement a
contractionary policy or expansionary policy?
Expansionary
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The Fed wants to implement a contractionary policy.
Should it increase or decrease interest rates?
Increase
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What did I score on the SAT?
(back in the days when it only had 2 sections, not 3)
1590out of 1600
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Banks that borrow from the Fed pay what rate of interest?
Discount Rate
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Who is in charge of Open Market Operations?
FOMCFederal Open Market Committee
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If the FOMC wants to increase the Money Supply, what would it do?
Buy government securities
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Where did I earn my Ph.D?
M.I.T.
It’s no Stanford, but it was the best I could do.
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If the FOMC sells government securities, what would happen to the
federal funds rate?
Increase
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The money people save that is available to be borrowed is known as
the _______ _________ market.
Loanable Funds
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If the government increases its borrowing, what would probably
happen to the level of interest rates?
Increase
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At which university was I chairman of the
Economics Department?
Princeton
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If people’s savings decline, what would probably happen to the level of
interest rates?
Increase
![Page 23: Are you smarter than a Fed Chairman?. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)](https://reader035.fdocuments.in/reader035/viewer/2022070402/56649f255503460f94c3c3b5/html5/thumbnails/23.jpg)
What would a decrease in interest rates do to the overall level of investment in the economy?
Make it increase
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What would an increase in investment do to the economic growth rate
of the economy?
Make it increase