Discussions-Read the scenario below, and then answer questions 1 and 2. Refer to this week’s readings in the text, if needed.Scenario: Bank A has an increase in deposits (or excess reserves) of $100

**************** *** ******** ***** *** then answer ********* * *** 2 Refer to this week’s ******** ** the **** ** *************** **** * *** ** increase in ******** *** ****** ********* ** ***** *** *** ******* *********** is *** **** ***** ***** not ******* reserves ****** the ************** **** ***** can Bank * ****** ** ****** ********* **** money can *** ******* ****** ** * ***** create? ***** ************** **** **** **** * ** ******* **** * of ****** ******** ** * result of *** ******** ** ******** ** **** **** to **** *** * ** ******** [=10% ** **** *** ********* *** M *** be ****** ******** Bank * *** create ** ********** $90 * ***** ** making loans ** *** **** amountThe new loan ** *** * **** ** **** * **** *** ** ********* ** some ***** bank ********* *** **** **** **** hold 10% of **** ****** and **** *** *** ********* amount which will **** ** ********* ** ******* **** ******* *** *** ******* **** ** **** *** **** bank receiving the ******* **** *** **** *** ****** ******** to **** outThe ***** multiplier ** ***** ***** r is the reserve ratioHere m = ************ *** ******* ***** ******* leads ** *** ******** ** additional ***** ****** ********* ** $1000 * [=100*10]-After ******* *** **** **** ******** ******** ******* ***** ********* ** your ******** *** the ******* ******** ****** goals?How *** *** Fed ********* ** meet some ** ***** ****** **** **** been the *********** *** ***** ** ******** **** *** *** ****** action ** intervene **** *** economy is *** well-functioning? *** ** why not?The current ******** ****** **** ** ****** ************ rate ** its ******* rate of **** **** *** current high rate ** ************ The *** *** **** **** interest ***** *** ** ********* ****** ****** ** **** ** will ** **** stimulate investments *** **** ****** ****** ** the ******* *** come ** * ********** *** this *** ******** in further ******* cascading ****** ** *** ********** of the economy ** is ***** ******** **** *** ***** recession has ******** ** ** ******** ** ********** ************ ***** *** **** ******** *** natural **** ** ************ *** *** ****** ******** ****** ********** ************ and ** the scenario ******** **** *** ****** *** **** *** ******** in ******* rate of ************ ** ****** ** ** ********* The *** *** ******* ** discontinue its ************ ****** ******* ** ****** quarters *** Fed *** used quantitative ****** to **** *** *** Funds target **** ***** ** **** so **** *** **** **** ** interest ** ******** A negative **** ******** rate implies **** ***** *** paying the Fed ** hold *** ******** Fed has kept *** ******** ***** *** to ********* ****** ****** and *************** ** *** ***** *** has **** ** **** ** *** monetary ****** are **** Deposit Facility ******** ** ******** *** Fed *** **** initiated ******** ******* ********** like Commercial ***** ******* ******** **** Asset Backed ********** **** ******** Primary ****** ****** ******** **** Securities ******* ******** Fed has ******* ************ these ** **** Fed *** **** ********** **** ******* Facilities ** **** *** ********* *********** ** banksThe ******* ** these ******* have **** **** ** has staved off * phase of depression **** *** Great Depression ** ******** **** ****** the economy ** ***** ******* ***** **** of growth the ****** ************ ** *** *** *** ***** *** ********* ****** **** collapsing ********** *** ******* in ** *** ***** ****** **** the ***** ***** ********* would **** ******* ***** ****** ** ***** assets *** unemployment is ***** ****** **** ******* ****** and ** ** quite possible **** the ******* **** ** ************ *** moved ******* *** to the **** ** growth in the **** few ****** agree **** the actions ***** ** the *** ** is ********** ****** to undertake ******** ****** stimulus **** ** ****** ****** ***** *** latter requires ************* ******** ** ****** by ****** events *** ********* ** the ******** ** holding back ****** policy ******** ** **** * ********* ******** policy ** *** only ***** ** ******* *** ******* **** ***** into ******* recession I think ******** ****** ** more effective **** ****** ****** ******* there ** no ******** involved in the ******


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