04 Jun FIS 260 Week 4 DQ 1 And DQ 2
Recall from Ch. 1 that policy makers are one of the key components of the financial system. The objectives of these policy makers include economic growth, high employment and price stability. How do you think you are personally affected when one or more of these objectives are not met? What do you think would happen if there was a downturn in the GDP? What would happen to the economy if unemployment increased? What would be the effects of rising inflation on the overall financial system and on you as an individual?
Week 4 DQ 2
Why do you think it is important to control the money supply? Why do you think banks are required to keep a fraction of deposits in reserve? What would happen if there were no required reserves for depository or lending institutions? What are some of the factors affecting these bank reserves? Explain your answers.
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