Monetary policy bingo

Exercise and reference answers

Clues and terms

1. Clue

   The most common United States policy tool since the early 1920s.

   Item

   Open market

2. Clue

   The rate banks pay on loans taken from the central bank.

   Item

   Discount rate

3. Clue

   The rate specifically targeted by open market operations.

   Item

   Fed funds rate

4. Clue

   Lowers interest rates and stimulates borrowing in the economy.

   Item

   Expansionary

5. Clue

   Raises interest rates and reduces borrowing in the economy.

   Item

   Contractionary

6. Clue

   Depositors racing to the bank to withdraw their deposits.

   Item

   Bank run

7. Clue

   Keeps depositors whole even if their bank goes bankrupt.

   Item

   Deposit cover

8. Clue

   The difference between the assets and the liabilities of a bank.

   Item

   Bank capital

9. Clue

   The long and variable delay before policy reaches the economy.

   Item

   Time lag

Instructions

Read each clue and tap the term it describes.

Explanation