- Iroquois High School
- Economics
- Economic Assignments
Discovery the Federal Reserve
Students are to utilize the internet and address each of the following questions using complete sentences.
1. List the tools that the Fed can use to change the money supply.
2. Explain how the Fed uses open market operations to change the nation’s money supply.
3. Show how the money multiplier is used to calculate the total change in money supply resulting from an initial change in reserves.
4. Describe how the Fed affects the money supply when it changes the required reserve ratio or the discount rate, and explain why the Fed seldom uses these two tools.
5. Explain why it is important to prevent bank panics, and why there have been relatively few bank failures since 1933.
6. For the latest information about the health of the banking system and individual banks, including your own, go to the FDIC’s Web site at http://www.fdic.gov. Navigate through the site to find how many banks have failed since the end of 2001. Divide the period of time from 2002 - 2006, 2007-20011, 2012 - 2015, identify the change during these three different periods of time. What seems to be responsible for this trend?
2002 - 2006: ______________
2007 - 20011: ______________
2012 - 2015: ______________
7. Review the Fed’s online brochure on the Federal Open Market Committee (FOMC) at http://www.federalreserve.gov/pubs/frseries/frseri2.htm, especially the sections titled “The Decision-making Process” and “Reports.” What information does the FOMC consider as it plans open-market operations? Look at the minutes of the most recent meeting to determine what kinds of open-market operations are going on now
8. ” Go to the Federal Reserve System’s Web site and look for the most recent Congressional testimony of the board chairman (http://www.federalreserve.gov/newsevents/testimony/yellen20150715a.htm). Is the Fed currently signaling that it will raise or lower interest rates, or that it will hold them constant? Is the Fed stating its intentions directly, or hiding them with vague language.