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Unformatted text preview: Amt of bonds demanded < or > amount supplied Excess demand of money Money supply < or > Quantity demanded Excess supply of bonds Amt of bonds demanded < or > amount supplied Bond Prices and Interest Rates Inversely Related.why? Fed wants to lower the interest rate?? Aka: By doing what?? 1. 2. 3. Fed wants to increase the interest rate?? Aka: By doing what? 1. 2. 3. Fill in the Blank How do Interest Rate Changes Affect the Economy? The Fed follows and expansionary monetary policy. Fed would _________ money supply thru open market ________ of bonds.--Interest rate will ________. How is the macroeconomy affected? A __________ in the interest rate will boost several diff types of spending in the economy....
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This note was uploaded on 04/19/2008 for the course ECON 201 taught by Professor Shea during the Fall '08 term at Maryland.
- Fall '08
- Monetary Policy