The multiplier the reciprocal of the reserve requirement times excess

The multiplier the reciprocal of the reserve

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The multiplier (the reciprocal of the reserve requirement) times excess reserves,yields changes in the money supply
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9. What is the fed funds rate?
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9. What is the fed funds rate? The interest rates banks (financial institutions) lend to other banks for short term borrowing (overnight loans from their excess reserves at their Fed account to another’s)
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10. What happens to the fed funds rate if the Fed follows a contractionary (tight money) policy?
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10. What happens to the fed funds rate if the Fed follows a contractionary (tight money) policy? The federal funds rate increases
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11. What happens to the fed funds rate if the Fed follows a expansionary (easy money) policy?
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11. What happens to the fed funds rate if the Fed follows a expansionary (easy money) policy? The federal funds rate decreases
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12. Why do observers pay close attention to the federal funds rate?
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12. Why do observers pay close attention to the federal funds rate? It is a leading indicator (early indicator) of monetary policy and a forecast of the direction for other interest rates and for Fed assessment of the direction of the economy
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