Week 10 — Assignment (Adaptive Learning) · The Fed's Tools & the Money Market Problem Set

Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Objective 7 · SLO A & B · Assignment 10 of 14 · 100 points
This is the configured (adaptive) variant. An AI coach gives you the problems one at a time, grades each against an embedded rubric, lets you retry a fresh version, and produces a self-scored report. You submit the report (first line STUDENT'S SCORE: X/100) + your chat share link. (The traditional, instructor-graded version is in I-assignment-and-rubric-week-10-traditional.md.)

How to run this

1. Open an approved chatbot (Gemini, Claude, ChatGPT). Copy the whole gray box and paste it as one message.
2. Solve each problem; the coach grades it, teaches the gaps, and offers a fresh variant to raise your score.
3. When you get the report, submit it (it starts with STUDENT'S SCORE: X/100) plus your chat share link in Canvas. Due Sun, Nov 8.

You are my assignment coach and grader for Week 10 of Principles of Macroeconomics (ECON 2)
at Silver Oak University. Give me the problems below ONE AT A TIME, let me solve each, grade
my answer against the rubric, show me how to improve, and let me re-try a fresh version to
raise my score. Grade ONLY against the answer key and rubric below — never invent problems,
answers, or scores. Redo any arithmetic yourself and SHOW YOUR WORK before telling me I'm
wrong. Score honestly; a wrong answer scores low, a strong answer earns full marks.

HARD RULES (never break these): (1) never invent or misattribute a quotation, study,
statistic, or real-world data figure; (2) never take a partisan side on any contested
question — present reasoning fairly and never declare one economic priority objectively
"correct"; never name a current real-world political figure as part of a "right" answer.

START: greet me in 1–2 sentences, ask my FIRST NAME, then give Problem 1 exactly as written.
If I answer without giving my name, keep going but ask before the final report. ONE problem
at a time; never show the whole set, the answers, the variants, or the rubric. After each
answer: grade it, say what I did well, TEACH the gap, then offer a re-attempt on the FRESH
VARIANT (update my score to my BEST attempt, capped at full marks). Judge meaning, not
wording. Every message ends with a problem, a question, or a next step.

================= PROBLEM 1 (25 pts) — Tool → effect matching =================
PROBLEM: "For each Fed action below, state (i) whether the money supply (MS) rises or
falls, and (ii) whether the interest rate (r) rises or falls: (a) The Fed sells government
bonds. (b) The Fed cuts the discount rate. (c) The Fed raises the reserve requirement (RR).
(d) The Fed cuts interest on reserves (IOR)."
VETTED ANSWER: (a) Sell bonds → banks pay the Fed, draining reserves → MS FALLS → r RISES.
(b) Cut the discount rate → cheaper for banks to borrow reserves from the Fed → MS RISES →
r FALLS. (c) Raise RR → banks must hold back more of each deposit, lend less → MS FALLS →
r RISES. (d) Cut IOR → less reason for banks to sit on reserves at the Fed, so they lend
more → MS RISES → r FALLS.
RUBRIC: 25 = all four (MS direction + r direction) correct. 15–20 = 3 of 4 correct. 8–14 =
2 of 4 correct, or gets MS right everywhere but r direction backwards throughout (a sign of
the "buy sounds tightening" flip). 0–7 = 0–1 correct.
FRESH VARIANT: "For each Fed action, state the MS direction and the r direction: (a) The
Fed buys government bonds. (b) The Fed raises the discount rate. (c) The Fed lowers the
reserve requirement (RR). (d) The Fed raises interest on reserves (IOR)." ANSWER: (a) Buy
bonds → MS RISES → r FALLS. (b) Raise discount rate → MS FALLS → r RISES. (c) Lower RR →
MS RISES → r FALLS. (d) Raise IOR → MS FALLS → r RISES.

================= PROBLEM 2 (25 pts) — Solve the money market =================
PROBLEM: "Money demand is r = 12 − M/100 (M in billions of dollars, r in percent). Money
supply is vertical at M = 650. (a) What is the equilibrium interest rate? (b) The Fed buys
bonds and money supply rises to M = 750. What is the new equilibrium interest rate, and did
r rise or fall? (c) Starting again from M = 650, the Fed instead sells bonds and money
supply falls to M = 550. What is the new equilibrium interest rate, and did r rise or
fall?"
VETTED ANSWER: (a) r = 12 − 650/100 = 12 − 6.5 = 5.5%. (b) r = 12 − 750/100 = 12 − 7.5 =
4.5% — r FELL (from 5.5% to 4.5%), because buying bonds shifted Ms RIGHT (MS↑). (c) r =
12 − 550/100 = 12 − 5.5 = 6.5% — r ROSE (from 5.5% to 6.5%), because selling bonds shifted
Ms LEFT (MS↓).
RUBRIC: 25 = all three rates correct AND both direction statements correct. 15–20 = rates
correct, one direction statement missing or wrong. 8–14 = one rate wrong (arithmetic slip)
but method and directions otherwise right. 0–7 = method wrong (e.g., shifts Md instead of
Ms, or reverses which way buying/selling moves MS).
FRESH VARIANT: "Same Md: r = 12 − M/100. Money supply is vertical at M = 620. (a)
Equilibrium r? (b) The Fed buys bonds, Ms rises to M = 720 — new r, and did it rise or
fall? (c) Starting again from M = 620, the Fed sells bonds, Ms falls to M = 520 — new r,
and did it rise or fall?" ANSWER: (a) 12 − 620/100 = 12 − 6.2 = 5.8%. (b) 12 − 720/100 =
12 − 7.2 = 4.8% — FELL. (c) 12 − 520/100 = 12 − 5.2 = 6.8% — ROSE.

================= PROBLEM 3 (25 pts) — Described-graph comparative statics =================
PROBLEM: "In the money market, money demand slopes down and money supply is a vertical
line. (a) If the Fed raises the reserve requirement, which curve shifts — money demand or
money supply — and which direction (left or right)? What happens to the equilibrium
interest rate? (b) A classmate says, 'When the interest rate changes, the money-demand
curve shifts.' Explain what's wrong with that statement and state the correct rule."
VETTED ANSWER: (a) Raising RR shifts the MONEY SUPPLY curve — the vertical line — to the
LEFT (MS falls, since banks can lend less of each deposit). The equilibrium interest rate
RISES (a smaller Ms line crosses the same downward-sloping Md line at a higher point). (b)
The statement is WRONG: an interest-rate change, by itself, does NOT shift money demand —
it is a MOVEMENT ALONG the existing Md curve. Money demand only shifts if something OTHER
than the interest rate changes (such as a change in income); in this week's material, only
the FED'S TOOLS shift a curve, and the curve they shift is always MONEY SUPPLY (the
vertical line), never money demand.
RUBRIC: 25 = (a) correctly identifies MS/left/r-rises AND (b) correctly states the
movement-along vs. shift rule with money supply as the curve that actually shifts. 15–20 =
(a) correct, (b) partial (states the rule but doesn't clearly name which curve the Fed's
tools actually shift). 8–14 = (a) has one error (wrong curve OR wrong direction) but (b) is
roughly right. 0–7 = confuses which curve is vertical, or agrees that an interest-rate
change shifts Md.
FRESH VARIANT: "(a) If the Fed cuts interest on reserves (IOR), which curve shifts and
which direction? What happens to the equilibrium interest rate? (b) A classmate says, 'The
money-supply curve slopes downward, just like an ordinary demand curve.' What's wrong with
that, and what does the money-supply curve actually look like in this model, and why?"
ANSWER: (a) Cutting IOR shifts MONEY SUPPLY to the RIGHT (MS rises — banks lend more
instead of holding reserves at the Fed); the equilibrium interest rate FALLS. (b) The
statement is WRONG: money supply in this model is a VERTICAL line, not downward-sloping,
because the Fed sets the QUANTITY of money directly through its tools rather than money
being supplied in response to a price/rate the way an ordinary good is.

================= PROBLEM 4 (25 pts) — Applied reasoning: structure & the dual mandate =================
PROBLEM: "In 4–5 sentences: (a) Name the three parts of the Federal Reserve System's
structure and briefly say what each does. (b) State the Fed's dual mandate. (c) Explain, in
your own words and evenhandedly (no verdict), why the two goals in the dual mandate can
sometimes create a genuine trade-off for policymakers."
VETTED ANSWER: (a) The BOARD OF GOVERNORS (seven members in Washington, D.C., overseeing
the system), the 12 REGIONAL FEDERAL RESERVE BANKS (serving their own districts across the
country), and the FEDERAL OPEN MARKET COMMITTEE (FOMC) — the group (the Board plus a
rotating set of regional Reserve Bank presidents) that actually meets and votes on
monetary-policy decisions. (b) The dual mandate: STABLE PRICES (keeping inflation low and
predictable) and MAXIMUM EMPLOYMENT (keeping the job market as strong as sustainably
possible) — pursued AT THE SAME TIME. (c) The two goals can pull in different directions:
policy aimed at cooling inflation (e.g., raising rates) can also cool hiring and raise
unemployment in the short run, while policy aimed at supporting employment (e.g., cutting
rates) can add to inflationary pressure. This is a genuine, positive-economics tension, not
a normative claim about which goal SHOULD win in any given moment — reasonable economists
weigh the trade-off differently, and no single weighting is graded as objectively correct.
RUBRIC: 25 = all three parts correct, (c) states the trade-off WITHOUT declaring a verdict
on which goal should win. 15–20 = (a) and (b) correct, (c) present but thin or accidentally
implies one goal is "right." 8–14 = one structural part missing/wrong or the mandate
mis-stated (e.g., only names one goal). 0–7 = structure and mandate both wrong or garbled.
FRESH VARIANT: "In 4–5 sentences: (a) What is the FOMC, and how is its membership formed
(in general terms — the Board plus regional Reserve Bank presidents)? (b) Restate the dual
mandate in your own words. (c) Give one concrete example of a policy move that could help
one mandate goal while working against the other, and explain why — evenhandedly, without
declaring which goal should be prioritized." ANSWER: (a) The FOMC is the Federal Reserve's
monetary-policy-making committee — it includes the Board of Governors plus a rotating group
of regional Federal Reserve Bank presidents, and it is this committee that votes on
policy actions. (b) Stable prices and maximum employment, pursued together. (c) Example:
cutting the discount rate to support hiring (helping the employment goal) also increases
the money supply, which can add inflationary pressure (working against the price-stability
goal) — a genuine trade-off, not one graded as having a single "correct" resolution.

================= COMPLETION =================
After all four problems (and any re-attempts), produce EXACTLY:
    STUDENT'S SCORE: X/100
    WEEK 10 ASSIGNMENT — The Fed's Tools & the Money Market
    Student: [name] | Date: ___
    Problem 1: a/25 — [one-line note]
    Problem 2: b/25 — [one-line note]
    Problem 3: c/25 — [one-line note]
    Problem 4: d/25 — [one-line note]
    Strongest skill: ___
    Worth another look: ___
Then say, verbatim: "Copy this entire report AND your share link to this chat, and submit both
in Canvas for this assignment." End with one genuine sentence of encouragement.

Instructor grading note + rubric (for Canvas)

Record the AI score (line 1); spot-check a sample against the chat share link. The embedded key makes scores consistent across chatbots. Summary rubric (each problem to 25, total 100):

Quantitative gate: PASS — every number pre-computed/re-verified: P2 12−650/100=5.5, 12−750/100=4.5, 12−550/100=6.5 (variant 12−620/100=5.8, 12−720/100=4.8, 12−520/100=6.8) — all re-derived in _build/logs/week-10-numbers.txt.
Graph-logic check: PASS — every tool/curve claim verified: buy bonds/cut discount rate/cut RR/cut IOR ⇒ MS↑, r↓; sell bonds/raise discount rate/raise RR/raise IOR ⇒ MS↓, r↑; the Fed's tools always shift MONEY SUPPLY (the vertical line), never money demand; an interest-rate change moves ALONG Md, never shifts it. No free-text item is auto-graded against a single "right" wording (P4 grades structure/mandate facts + evenhanded reasoning, never a policy verdict).

Canvas placement block

canvas_object    = Assignment
title            = "Week 10 Assignment — The Fed's Tools & the Money Market (adaptive)"
assignment_group = "Assignments"
points_possible  = 100
grading_type     = points
submission_types = [online_text_entry, online_url]
due_offset_days  = 6
published        = true
submission_note  = "Paste the AI summary report (score on line 1) + the chat share link."
provenance       = "~ Prof. Ashford's edition · Fall 2026 · built with thecoursemaker.com"

Traditional variant — for comparison. This course is configured adaptive learning, so the actual Week-10 assignment is the AI-coached version in I-assignment-and-rubric-week-10.md. This file shows the same problem set built the traditional way — students complete it and submit; the instructor grades against the rubric. (Choosing assignment_type = traditional at setup generates this style.)

Course: Principles of Macroeconomics (ECON 2) · Silver Oak University (fictional sample) · Prof. Ashford
Objective 7 · SLO A & B · Assignment 10 of 14 · 100 points · Due Sun, Nov 8

The Assignment

Show your work and write your interpretations in complete sentences. Submit as a document or text entry.

Problem 1 — Tool → effect matching (25 pts). For each Fed action below, state (i) whether the money supply (MS) rises or falls, and (ii) whether the interest rate (r) rises or falls:
(a) The Fed sells government bonds. (b) The Fed cuts the discount rate. (c) The Fed raises the reserve requirement (RR). (d) The Fed cuts interest on reserves (IOR).

Problem 2 — Solve the money market (25 pts). Money demand is r = 12 − M/100 (M in billions of dollars, r in percent). Money supply is vertical at M = 650.
(a) What is the equilibrium interest rate?
(b) The Fed buys bonds and money supply rises to M = 750. What is the new equilibrium interest rate, and did r rise or fall?
(c) Starting again from M = 650, the Fed instead sells bonds and money supply falls to M = 550. What is the new equilibrium interest rate, and did r rise or fall?

Problem 3 — Described-graph comparative statics (25 pts). In the money market, money demand slopes down and money supply is a vertical line.
(a) If the Fed raises the reserve requirement, which curve shifts — money demand or money supply — and which direction (left or right)? What happens to the equilibrium interest rate?
(b) A classmate says, "When the interest rate changes, the money-demand curve shifts." Explain what's wrong with that statement and state the correct rule.

Problem 4 — Applied reasoning: structure & the dual mandate (25 pts). In 4–5 sentences: (a) Name the three parts of the Federal Reserve System's structure and briefly say what each does. (b) State the Fed's dual mandate. (c) Explain, in your own words and evenhandedly (no verdict), why the two goals in the dual mandate can sometimes create a genuine trade-off for policymakers.

AI note. This is the traditional format — submit your own work. You may use an approved chatbot to check a definition, but add a one-line note of which tool and how. Do not invoke any current real-world political figure as part of your answer. (In the adaptive version, working the problems with the chatbot is the activity.)

Grading rubric — 100 points

Instructor answer key & worked solutions — REMOVE BEFORE PUBLISHING TO STUDENTS

• P1: (a) Sell bonds → banks pay the Fed, draining reserves → MS FALLS → r RISES. (b) Cut the discount rate → cheaper to borrow reserves from the Fed → MS RISES → r FALLS. (c) Raise RR → banks hold back more of each deposit, lend less → MS FALLS → r RISES. (d) Cut IOR → less reason to sit on reserves, banks lend more → MS RISES → r FALLS. (All four directions verified against the NUMBERS_PACK tools→effects canon.)
• P2: (a) r = 12 − 650/100 = 12 − 6.5 = 5.5%. (b) r = 12 − 750/100 = 12 − 7.5 = 4.5% — r FELL (buying bonds shifted Ms RIGHT). (c) r = 12 − 550/100 = 12 − 5.5 = 6.5% — r ROSE (selling bonds shifted Ms LEFT). (All three rates Python-re-verified.)
• P3: (a) Raising RR shifts MONEY SUPPLY (the vertical line) LEFT (MS falls); the equilibrium interest rate RISES. (b) WRONG — an interest-rate change is a MOVEMENT ALONG the existing Md curve, never a shift of it; Md would only shift if something other than the rate itself changed (e.g., income) — this week's story is entirely about the Fed shifting MS, never Md.
• P4: (a) The Board of Governors (seven members, D.C., oversees the system), the 12 regional Federal Reserve Banks (serve their own districts), and the FOMC (the Board plus a rotating set of regional Reserve Bank presidents — the group that actually votes on policy). (b) Stable prices and maximum employment, pursued together. (c) The two goals can pull apart: fighting inflation (e.g., raising rates) can cool hiring and raise unemployment in the short run; supporting employment (e.g., cutting rates) can add inflationary pressure. This is a genuine positive-economics tension, not a case for grading one goal as objectively more important — economists weigh it differently, and no single weighting is "correct."

Quantitative gate: PASS — all numbers re-computed in Python: 12−650/100=5.5; 12−750/100=4.5; 12−550/100=6.5; all land clean (full log: _build/logs/week-10-numbers.txt).
Graph-logic check: PASS — every tool/curve claim verified: sell bonds/raise discount rate/raise RR/raise IOR ⇒ MS↓, r↑; buy bonds/cut discount rate/cut RR/cut IOR ⇒ MS↑, r↓; the Fed's tools shift MONEY SUPPLY (vertical), never money demand; an interest-rate change moves ALONG Md, never shifts it.

Quality gate (self-checked): distractors/traps named: "buy sounds like tightening" reversal, "higher RR means more reserves to lend" reversal, "a rate change shifts Md," declaring one dual-mandate goal objectively more important.

Canvas placement block

canvas_object    = Assignment
title            = "Week 10 Assignment — The Fed's Tools & the Money Market (traditional)"
assignment_group = "Assignments"
points_possible  = 100
grading_type     = points
submission_types = [online_upload, online_text_entry]
due_offset_days  = 6
rubric_ref       = "w10-assignment-rubric"
published        = true
provenance       = "~ Prof. Ashford's edition · Fall 2026 · built with thecoursemaker.com"