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Open market operations

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1. What are the two types of fiscal policy and how are aggregate expenditures affected by each policy?

2. Briefly explain how each of the Federal Reserve's Monetary Polciy tools affects teh LM curve.

3. In the short-run what is the policy dilemma when the economy is experiencing stagflation>

4. If a government is concerend with crowing out, how can monetary policy accomodate fiscal policy in the context of the IS-LM model

5.Explain the difference between fixed and flexible exchange rate regimes? Give examples of conutries using fixed and flexible exchange rate regimes. Whate are the advantages and disadvantages of teh different regimes?

6. Explain the difference between the current account and capital account in the Balance of payments. What is the value of the US currect account and capital account today?

7. Explain what happens to bank reserves and the federal funds rate for an open market purchase of government securities by the Fed.

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Solution Summary

Open market operations and other concepts are expressed.

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Federal Reserve: Reasons for bank regulations, effect of policies

Assignment Overview

In the individual assignment due this week, students explore the reasons behind regulating banks and how that regulation relates to the formation of the Federal Reserve System. Students demonstrate an understanding of the effects Federal Reserve policies have on interest rates, financial markets, and financial institutions. Students are given the opportunity to participate in additional activities that further explore the risks faced by financial institutions and how those risks are measured.

In the Learning Team assignment due this week, students deepen their understanding of the services provided, main source of funding, interactions with financial markets, and how Federal Reserve policies affect financial institutions.

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