1) What kinds of Monetary policy(easy or tight) should be exercised under the recessionary gap? Give examples of policy tools in terms of RRR(Required Reserve Ratio), DR(Discount rate) and OMP(open market policy) (1 point).
2) Explain the” MONEY MULTIPLIER” of money creation including the formula and the process.(1 point)
3) Compare discount rate, federal fund rate, prime(lending) rate and deposit rate.(1 point)
4) Discuss the relationship between Bond price and interest rate. (1 point)
5) Treasure Hunt:
a) Go to www.cengage.com/sso (Links to an external site.)Links to an external site. web site. At Bookshelf of Arnold economics of 10th edition, click Economics Course Mate of Economics(11th ed) by Roger A Arnold . Then, click “select chapter” for Ch 15 and try Ch15; Monetary Policy to get access to “Sample Quizzes” under left menu bar. Describe #4 question and its correct answer with logical explanation. (3 points)
b)After watching ” BBC video ” of Ch 12, and 13 at www.cengage.com/sso, (Links to an external site.)Links to an external site. analyze the contents of those videos by relating into economic theories. (3 points)