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Money Train Multimedia

In: Business and Management

Submitted By dagurley
Words 724
Pages 3
Title of Paper: Assignment: Money Train Multimedia Activity
Student Name: Daniel Gurley
Course/Number: XECO/212 ECONOMIC THEORY
Due Date (MM/DD/YYYY): 06/24/2012
Instructor Name: Jaime Medina

Scenario 1
In 150 to 200 words, explain your reasoning for the way you are planning on using Reserve Requirements. Be sure to address the following: 1. How Reserve Requirements affect the economy 2. How your action will affect economic growth 3. Why it is important to increase economic growth 4. Your rationale for the use of Reserve Requirements At the end of the game, you will be provided with this information to give to your instructor.

Answer:
The action that I selected was to lower the reserve requirement. Lowering the reserve requirements allows the bank to free more funds for lending. This action also reduced the amount of money that the banks were required to keep in their reserves. This increased the money supply that is available for use to the economy and lowered the interest rate for consumers. This action will assist the economy by providing more relaxed funding for all consumers and will aid in sparking economic growth. With more money available and easier funding by the banks, consumers are able to spend as needed. In this case, both businesses and consumers thrive economically. Increasing the reserve would reverse would have a negative effect on the economy and would take money away from consumers and businesses and could lead to an economic downturn. Effective use of reserve requirements ensures that the correct amount of money is flowing through the economy at any given time.

Scenario 2
In 150 to 200 words, explain your reasoning for the way you are planning on using the Discount Rate. Be sure to address the following : 1. How the Discount Rate can affect the economy 2. How your action will affect economic growth 3. Why it is important

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