1.If you deposit $1,000 of borrowed money in a bank checking account, by how much do you increase the money supply?

2. Why does the Federal Reserve establish a required reserve ratio?

3. What three tools could the Federal Reserve use to adjust the money supply?

4. What two effects, leading to an increased money supply, could reducing the RRR have?

5. How do banks respond to a lowered discount rate?

6.  How does a raised discount rate affect bank loans and the money supply?

7.  How does the Fed’s sale of bonds reduce the money supply?

8.  Which of its monetary policy tools does the Federal Reserve use most often?