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Unformatted text preview: federal fund rate by .5 percent. PG 273 cyclical deficits a deficit caused by the business cycle. Tight money means a restrictive monetary policy. Expansionary monetary policy- soft money. Easy money. When the fed buys bonds, buying means . excessive reserves increase , money supply increase, bank reserves increase, the federal fund rate decrease. Investment spending increase, real gdp increase. When you sell your taking liquidity from the system. Money can be created and money can be destroyed. A money multiplier. This money multiplier will tell you how much excess reserves can support loans. 5 questions for Monday you may not know. Ben bernaky is the fed chairman Hank Paulson is the secretary of treasury....
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- Spring '08
- Interest Rates