How the fractional reserve banking system creates money

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1. Explain the policies that are available to the government to increase Aggregate Supply.

2. Explain how the fractional reserve banking system creates money.

3. What is a liquidity trap? Explain using a money supply- money demand diagram.

4. Explain the fiscal and monetary policy options available to reduce an inflationary gap?

5. What is the likely effect on America’s trade balance when the dollar appreciates? And when it depreciates?

6. Explain the role of rising inequality in causing the economic crisis of 2008.

Reference no: EM13795875

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