Chapter 10: The Federal Reserve
1. What is the primary role of the Federal Reserve?
2. Why should there be any limit to the rate at which the economy can grow, p.220?
3. What is the result of an "easy money" FED policy?
4. Discuss why the American economy has a “speed limit” and how the Fed helps the economy maintain that speed. What are the ramifications of going too slow or too fast, p.221?
5. What's the name of the committee responsible for determining interest rates?
6. Define discount rate and tell why there is a stigma attached to banks utilizing these funds.
7. Define the federal funds rate and discuss how the Fed manipulates it.
8. How exactly does the Fed create new money?
9. How does this process work in reverse?
10. Explain why fixed rate loans are difficult to issue with massive inflation.
11. Differentiate between wealth and money.
12. Explain why the overall role of the FED is significant.
2. Why should there be any limit to the rate at which the economy can grow, p.220?
3. What is the result of an "easy money" FED policy?
4. Discuss why the American economy has a “speed limit” and how the Fed helps the economy maintain that speed. What are the ramifications of going too slow or too fast, p.221?
5. What's the name of the committee responsible for determining interest rates?
6. Define discount rate and tell why there is a stigma attached to banks utilizing these funds.
7. Define the federal funds rate and discuss how the Fed manipulates it.
8. How exactly does the Fed create new money?
9. How does this process work in reverse?
10. Explain why fixed rate loans are difficult to issue with massive inflation.
11. Differentiate between wealth and money.
12. Explain why the overall role of the FED is significant.