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Question description

• Go to http://sffed-education.org/chairman. Use the Learn More button and review the tight  (contractionary) and easy (expansionary) tools of the Fed as well as the use of each. Briefly examine the Economic Dictionary and the Policy in Depth features.
• Now play the game! You are the Fed Chairperson! You begin with 16 quarters, 4 years, then your job is up for review. You begin with rates at 4.5, inflation at  2.14% and unemployment at 4.75%.
• Make decisions on interest rates for the 16 quarters. Summarize the changes you chose and explain your results. Do you still have a job? Why or why not?
• Complete the following from the textbook:

• Chapter 4: E2

2. As the executive of a bank or thrift institution you are faced with

an intense seasonal demand for loans. Assuming that your loanable

funds are inadequate to take care of the demand, how might your

• Chapter 5: P1

P1 1. A new bank has vault cash of \$1 million and \$5 million in deposits

held at its Federal Reserve District Bank.

a. If the required reserves ratio is 8 percent, what dollar amount

of deposits can the bank have?

b. If the bank holds \$65 million in deposits and currently holds

bank reserves such that excess reserves are zero, what

required reserves ratio is implied?

• CH 5: P6

6. Assume that banks must hold a 2 percent reserve percentage

against transaction account balances up to and including \$40 million.

For transaction accounts above \$40 million, the required reserve

percentage is 8 percent. Also assume that Dell National Bank has

transaction account balances of \$200 million.

a. Calculate the dollar amount of required reserves that Dell

National Bank must hold.

b. What percentage of Dell’s total transaction account balance

must be held in the form of required reserves?

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