Tuesday, April 6, 2010

Monetary Policy


Students shall be able to

  1. Identify the goals of monetary policy.

  2. List the principal assets and liabilities of the Federal Reserve Banks.

  3. Explain how each of the three quantitative controls may be used by the Fed to expand and to contract the money supply.

  4. Describe three monetary policies the Fed could use to reduce unemployment.

  5. Describe three monetary policies the Fed could use to reduce inflationary pressures in the economy.

  6. Explain the cause effect chain between monetary policy and changes in equilibrium GDP.

  7. Demonstrate graphically the money market and how a change in the money supply will affect the interest rate.

  8. Show the effects of interest rate changes on investment spending.

  9. Describe the impact of changes in investment on aggregate demand and equilibrium GDP.

  10. Contrast the effects of an easy money policy with the effects of a tight money policy.

  11. Identify the federal funds rate and its importance for monetary policy.

  12. List four shortcomings and three strengths of monetary policy.

  13. Explain the net export effect of an expansionary and a contractionary monetary policy.

  14. Define and identify terms and concepts at the end of the chapter.


  1. Watch Economics USA: Monetary Policy.


  1. View Economics USA: Monetary Policy.

  2. Answer a set of questions from the video. [Word or PDF]



Monitor and adjust to check understanding.