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Assignment 5 - Econ 500 Fall 2011 Z Janko DEPARTMENT OF...

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DEPARTMENT OF ECONOMICS Econ 500 (01) – Money and Banking Fall 2011 Assignment 5 Assigned Nov. 21 st , 2011 DUE Dec. 8 th , 2010 This HW covers chapters: 18 (Tools of Monetary Policy), 19 (Conduct of Monetary Policy), and some articles. INSTRUCTIONS: You will need to provide reasoning in answering SOME (see below) of the MC questions. The economic reasoning MUST BE TYPED. I will grade all 8 MC questions. Each question is worth 2.5 points. Each explanation is worth 2.5 point. The explanation should be max 50 words long (about as long as this paragraph). Part I. Multiple Choice : Circle the best answer. When uncertain, choose the best answer possible. 1. What is the impact on the overnight market when the FED conducts open market sales (assuming i ff is not at the floor nor at the ceiling) a. Non-borrowed reserves increase lowering the federal funds rate b. Non-borrowed reserves increase increasing the federal funds rate c. Non-borrowed reserves decrease lowering the federal funds rate d. Non-borrowed reserves decrease increasing the federal funds rate EXPLAIN:
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