ECO 202 Module 3 Case Assignment and SLP

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ECO 202 Module 3: The Money Market

ECO 202 Module 3 Case Assignment

Can Debit and Credit Cards be treated as money? Explain your answer.

Assume that the bank holds no excess reserves and that the required reserve ratio equals 10% of deposits. If a customer deposits $5,000, what would be the total increase in checking account balances throughout all banks? Explain the process by which the banking system creates money.

In your own words, list the Fed’s main policy tools and briefly explain each one.

TRUE or FALSE. “When the Fed makes an open market purchase of government securities, the quantity of money will eventually decrease by a fraction of the initial change in the monetary base.” Is the previous statement correct or incorrect? Explain your answer.

ECO 202 Module 3 SLP

The organization’s financial health can be severely be affected by the fiscal and monetary policies taken by the Federal Government of the United States. The company has its reserves in the country and any percentage increase in the taxes by the government on oil and natural gas exploration and mining projects could take a heavy toll on the revenue margins of the company. As the company is a major player in the oil and natural gas in the country, these kind of fiscal policies can have a major impact on the country. Similarly, if there is a reduction in the taxes, the company could gain by the similar amount, as its revenues would then increase (Abel, & Bernanke, 2005)…….

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