Money case study
In this final Case Assignment, we will be answering questions about types of money, how the Fed uses money, and what happens when there is money but it is not being spent. This is a multi-part assignment, so make sure that you have addressed each question or topic. The best way to approach this assignment is to prepare your responses in outline form following the order of each question/topic. This will help you keep track of your responses.
Review this brief introductory video which provides a high level overview of the Fed and how it influences the money market.
Submit a 4- to 5-page paper that addresses the following questions. Be sure to use references within the paper to support your answers.
“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.
Monetary policy is action taken by the Fed to influence the level of real GDP. Suppose the Fed wants to increase the money supply. What three tools could the Fed use to achieve this goal? Be specific in your answer and discuss the implications of this policy.
Use concepts from the modular background readings as well as any good quality resources you can find. Cite all sources within the text and provide a reference list at the end of the paper.
Length: 4–5 pages double-spaced and typed in 12-point Times New Roman font.
The following items will be assessed in particular:
Your ability to understand an application of monetary policy.
Some in-text references to the modular background material. APA formatting is recommended. Use this site from the Purdue Owl if you need help with APA: https://tinyurl.com/3rnc5vt.
The essay should address each element of the assignment. Remember to support your answers with solid references, including the Case readings.