Essay Instructions
BACKGROUND:
Will be answering questions about types of money, how the Fed uses money, and what happens when there is money but it is not being spent. This is a multi-part assignment, so make sure that you have addressed each question or topic. The best way to approach this assignment is to prepare your responses in outline form following the order of each question/topic. This will help you keep track of your responses.
Review this brief introductory video which provides a high level overview of the Fed and how it influences the money market.
INSTRUCTIONS:
Submit a 4- to 5-page paper that addresses the following questions PLUS reference and cover pages =7 pages. Be sure to use references within the paper to support your answers.
Are credit cards or debit cards money? Explain your answer.
“When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base.” Is the previous statement correct or incorrect? Explain your answer.
Monetary policy is action taken by the Fed to influence the level of real GDP. Suppose the Fed wants to increase the money supply. What three tools could the Fed use to achieve this goal? Be specific in your answer and discuss the implications of this policy.
Expectations:
Use concepts from the modular background readings as well as any good quality resources you can find. Cite all sources within the text and provide a reference list at the end of the paper.
Length: 4–5 pages double-spaced and typed in 12-point Times New Roman font.
5 pages PLUS cover page and references= 7 pages
Sources to use plus any others if needed:
This module examines the important role of money in the economy. It is important to understand how money is defined. We will also analyze banks and other financial intermediaries that impact the creation of money. The Federal Reserve (the central bank) and how it controls the money supply is explored.
Changes in the money supply have major impacts on inflation, output, and employment. We will conclude the discussion with an analysis of monetary policy. Please review the following background materials:
5 Stages of Evolution of Money, from Your Article Library
Use the “Tiny URL” to access the site: https://tinyurl.com/y9n6adgz
If the “TinyURL” is not working, here is the full URL:
The History of Money: From Barter to Banknotes, Investopedia 2015
Use the ‘TinyURL’ to access the site: https://tinyurl.com/d78f5uy
If this is not working, here is the full URL:
http://www.investopedia.com/articles/07/roots_of_money.asp
The Fed – Monetary Policy, by the Board of Governors of the Federal Reserve System. Read the paragraph under Monetary Policy and then click ‘Learn more’ and the page on Purposes & Functions. Click on the image for each of the seven areas to get more information about that specific topic.
Use the ‘TinyURL’ to access the site: https://tinyurl.com/ybjaojhr
If it is not working, here is the full URL:
https://www.federalreserve.gov/monetarypolicy.htm
Federal Reserve Tools and How They Work, from The Balance, 2016
Use the ‘TinyURL’ to access the site: https://tinyurl.com/y9sh8szj
If it is not working, here is the full URL:
https://www.thebalance.com/federal-reserve-tools-and-how-they-work-3306134\
What are the Effects of Inflation on the Economy? From the Balance, 2017
Use the ‘TinyURL’ to access the site: https://tinyurl.com/y99pb4pc
If it is not working, here is the full URL:
https://www.thebalance.com/what-are-the-effects-of-inflation-357607
Monetary Policy Tools: How They Work, US Economy, 2017
Use the ‘TinyURL’ to access the site: https://tinyurl.com/ya38jsbx
If it is not working, here is the full URL:
https://www.thebalance.com/monetary-policy-tools-how-they-work-3306129