1. What kinds of fiscal policy the Treasury Department can use to stimulate the economy?

2. Briefly describe how each of them work.

——————

Briefly explain how each of the following actions by the FED affects the money supply.

1. Reduce FED fund’s rate

2. Buy back Treasury bonds

3. Lower the reserve requirement for the commercial banks

————

Briefly explain how the Federal Reserve Bank (FED) can use each of the following monetary policy tools to stimulate the economy:

1. FED fund’s rate

2. Open Market Operation

3. Commercial bank’s reserve requirement