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…

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:

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