What are the tools of monetary policy and how can the Federal Reserve apply these in a recessionary environment?

1. Students will appreciate the functions, structure and operations of the Fed

2. Students will understand how the Fed influences the money supply and aggregate demand

3. Students will understand the relationship between the money supply and interest rate

4. Students will appreciate contractionary and expansionary monetary policy and problems of monetary policy

For this assignment, please answer the following questions and provide examples when needed. This needs to be done with very detailed answers… This is NOT to be in ESSAY Format! The book you will need to use for this assignment is Exploring Microeconomics by Robert L Sexton.

1. Why do people hold money?

2. What are the tools of monetary policy and how can the Federal Reserve apply these in a recessionary environment?