1. Are you smarter than a Fed Chairman?

2. What are the 2 main components of M1? Cash Checking Accounts (Demand Deposits)

3. You deposit a $100 bill into your checking account. What immediate effect would this have on the Money Supply? No effect

4. You deposit $10,000 in a checking account when the Reserve Requirement is 20%. How much must your bank place in reserves? $2,000

5. TIME Magazine said I was.... What? The most powerful nerd on the planet!

6. The Reserve Requirement is 10%. What is the money multiplier? 10

7. The Reserve Requirement is 20%. You deposit $10,000 in your bank checking account. By how much might the money supply increase? $40,000

8. The supply of money increases while demand remains unchanged. What would happen to interest rates? Fall (decrease)

9. True or False: Since my high school did not offer Calculus, I learned it on my own. True

10. The Fed lowers the Reserve Requirement. What would this do to the Money Supply? Increase

11. The economy is in a recession. Should the Fed implement a contractionary policy or expansionary policy? Expansionary

12. The Fed wants to implement a contractionary policy. Should it increase or decrease interest rates? Increase

13. What did I score on the SAT? (back in the days when it only had 2 sections, not 3) 1590 out of 1600

14. Banks that borrow from the Fed pay what rate of interest? Discount Rate

15. Who is in charge of Open Market Operations? FOMC Federal Open Market Committee

16. If the FOMC wants to increase the Money Supply, what would it do? Buy government securities

17. Where did I earn my Ph.D? M.I.T. It’s no Stanford, but it was the best I could do.

18. If the FOMC sells government securities, what would happen to the federal funds rate? Increase

19. The money people save that is available to be borrowed is known as the _______ _________ market. Loanable Funds

20. If the government increases its borrowing, what would probably happen to the level of interest rates? Increase

21. At which university was I chairman of the Economics Department? Princeton

22. If people’s savings decline, what would probably happen to the level of interest rates? Increase

23. What would a decrease in interest rates do to the overall level of investment in the economy? Make it increase

24. What would an increase in investment do to the economic growth rate of the economy? Make it increase