Explain which of the following are counted as part
of the money supply (M1):
a. Checking account deposits
b. Stocks
c. Savings account deposits
d. Government bonds
3.
If the reserve requirement (rr) is 0.2, what is
the simple deposit multiplier? If, in addition, the
currency deposit ratio (c) is 0.05 and the excess
reserve ratio (e) is 0.15, what is the money multiplier?
Explain why the money multiplier differs
from the simple deposit multiplier
5
Explain which of these interest rates the Federal
Reserve sets:
a. The discount rate
b. The federal funds rate
c. The prime rate
1. Explain which of these interest rates the Federal
Reserve sets:
a. The discount rate
b. The federal funds rate
c. The prime rate
