Copy of Monetary Policy Worksheet - Monetary Policy...

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Monetary Policy Worksheet NAME ______________________________________ Read the following descriptions of possible monetary policy in order to complete the worksheet. 1. If you use Loose (Expansionary Monetary Policy) - Money policy you are trying to grow the economy and create more jobs by increasing the money supply. In reality the FED would do this by lowering the reserve requirement, buying government bonds and securities through open market operations, and/or lowering the discount rate. 2. If you use Tight (Contractionary Monetary Policy) Money policy you are trying to slow the economy down in order to fight inflation or prevent the economy from over heating and collapsing. The FED would do this by reducing the money supply. Money can be sucked out of the economy by raising the reserve requirement, selling government bonds and securities through open market operations, and/or raising the discount rate. 3. Doing nothing = the economy is perfect so we will do nothing or we cannot do anything. Our hands are tied. Make sure you specify which one it is.

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