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Money Train Simulator

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Submitted By nlascola7
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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:
Reserve requirements help to maintain a stable banking system and ensure that banks are able to conduct day-to-day check-clearing and cash-withdrawal transactions. These requirements are also one of the three monetary policy tools that the Fed can use, in principle, to control the money supply. The other two are open market operations and the discount rate. By lowering the reserve requirement, the banks will have more to loan which will expand the money stock and in the short term lower interest rate which encourages consumers and investors to buy more. When people and investors are buying more this increases economic growth. Increasing economic growth is important because it keeps society moving in a positive direction. Economic growth also contributes to advancements and increases standards of living and lowers unemployment. I chose lowering the reserve requirements because this would stimulate lending, reduce unemployment, and increase overall income so that the economy could recover.

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 to slow economic growth 4. Your rationale for the use of the Discount Rate At the end of the game, you will be provided with this information to give to

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