1. What is commodity money? What is flat money? Which kind do we use?

2. Given Bank A has a reserve ratio = 12.5%. Calculate the money multiplier.

3. Who is responsible for setting monetary policy in the United States? How is this group chosen?

4. If the Fed wants to increase the money supply with open market operations, what does it do?

5. Why doesn't the bank hold 100 precent reserves? How is the amount of reserves banks hold related to the amount of money the banking system creates?

6. What is the discount rate? What happens to the money supply when the Fed raises the discount rate?

7. Why can't the Fed control the money supply perfectly?