ECON 100 The Money Market

St. Charles Community College
ECON 100   Survey Economics
Class Discussion Problem


Illustrate the following situations using supply and demand curves for money:

a.    The Fed temporarily reduces the discount rate during a national crisis.

b.    The Fed acts to hold interest rates constant during a period of inflation.

c.    The Fed decreases the reserve ratio during a period of negative GDP growth.

d.    The Fed buys bonds in the open market during a period of slow economic growth.

e.    The Fed sells bonds in the open market during a period of rapidly increasing government spending.

f.    The Fed sells bonds in the open market during a recession.

g.    The Fed buys bonds in the open market during a period of high consumer optimism.

h.    A large number of consumers begin using debit cards and ATM machines.

i.    The Fed sells securities in the open market during a period of high inflation.

j.    Commercial banks raise their loan requirements during a downturn in the economy.