1. Fill in the following table. If the factors in the first column change as indicated, in which direction will the variables in the remaining columns change (i.e., rise (+), fall (-), stay the same (0))? Consider only the immediate and direct effects of these changes.
Impact: Government decreases taxes
Monetary Base:
Excess Reserves:
Total Reserves:
Impact: Central bank lowers its discount rate, and increases its lending to commercial banks
Monetary Base:
Excess Reserves:
Total Reserves:
Impact: Central bank decreases the required reserve ratio
Monetary Base:
Excess Reserves:
Total Reserves:
Impact: Central bank sells foreign currencies in the foreign exchange market to decrease the value of its own currency
Monetary Base:
Excess Reserves:
Total Reserves:
