The Federal Reserve System the Fed
|
|
- Daniel Barnett
- 5 years ago
- Views:
Transcription
1 The Federal Reserve System the Fed
2 12 Federal Reserve Districts Commercial banks banker
3 Board of Governors
4
5 Board of Governors 7 members appointed by president approved by Senate 14 yr. term chairman Janet Yellen Formerly Ben Bernanke Janet Yellen, the first woman to hold the position. Yellen was nominated on October 9, 2013, by President Obama and, confirmed by the United States Senate on January 6, 2014.
6 6 Major Jobs of the Fed Supply the economy with paper money and coins. Hold bank reserves. Provide check-clearing services Supervise member banks Serve as lender of last resort. Control the money supply
7 1.Supply the economy with paper money and coins. U.S. Mint Bureau of Engraving and Printing
8
9 2. Hold bank reserves reserves at the Fed + vault cash =total reserves
10 3.Provide check-clearing services Facilitates check-cashing between commercial banks. for example, Wells-Fargo and Bank of America
11 Between banks, cities EXAMPLE: Pete pays Sue for a used car. He gives her a check for $2,000. Sue deposits the check in her bank and is credited with $2,000 in her account. Sue s bank sends the check to FRB who increases the bank s reserve account by $2,000. FRB decreases Pete s bank s reserve by $2,000 FRB notifies Pete s bank to reduce Pete s account by $2,000.
12 4. Supervise member banks 5. Serve as lender of last resort Fed may audit a bank check that the loans it made are good be sure it has followed banking rules verify the accuracy of its accounting. Fed can lend funds to struggling banks. Glass-Steagall Act (1933) establishes FDIC
13 6. Control the money supply. I kept the most important for last! Tools for changing the money supply Reserve Requirement Discount Rate Open Market Operations Why is changing the money supply important? TO CONTROL INFLATION and/or UNEMPLOYMENT Monetary Policy
14 Review Answers 1. Federal Open Market committee: major decision maker in the FRB. 2. Federal Reserve System : US Central Bank 3. Board of Governor s : controls and coordinates fed activities (7 members) 4. Reserve account: funds required to be held in the FRB
15 Review Describe the structure of the Federal Reserve System. 7 member Board of Governors appointed by president, ratified by Senate 14 year term, chairman 12 districts In what year was it founded? 1913
16 Review 1. 6 major jobs? Supply the economy with paper money and coins. Hold bank reserves. Provide check-clearing services Supervise member banks Serve as lender of last resort. Control the money supply
17 Review Why would a bank choose to join the Federal Reserve System? FRB helps maintain bank stability Consumers want their accounts to be covered by FDIC
18 Review Describe the check-clearing process. Pete pays Sue for a used car. He gives her a check for $2,000. Sue deposits the check in her bank and is credited with $2,000 in her account. Sue s bank sends the check to FRB who increases the bank s reserve account by $2,000. FRB decreases Pete s bank s reserve by $2,000 FRB notifies Pete s bank to reduce Pete s account by $2,000.
19 The Money Creation Process Think of our banking simulation for fractional reserve banking
20 The Money Creation Process
21 Fed Tools for Changing the Money Supply
22 These tools are used to implement MONETARY POLICY Monetary policy has two basic goals: to promote "maximum" sustainable output and employment to promote "stable" prices
23 Why would the Fed want to change the money supply? Slow INFLATION (too much money chasing too few goods) Lower UNEMPLOYMENT (too many people out of work) Promote Growth in the Economy Slow down an over-heated economy Adjusting for the normal business cycle
24 Typical Business Cycle
25 Long Term Growth
26
27 Monetary Policy Fed is responsible for maintaining price stability and employment Expansionary Monetary Policy goal is to increase money supply to reduce unemployment to avoid deflation Contractionary Monetary Policy goal is to decrease the money supply to reduce inflation To prevent bubbles
28 3 Important Tools 1. Changing the Reserve Requirement 2. Changing the Discount Rate 3. Conducting Open Market Operations The three tools are interactive
29 1. Reserve Requirement currently: 3-10% Raise the reserve requirement = Less money in circulation slows the economy eventually brings price stability (lowers inflation) Lower the reserve requirement = More money in circulation More money to buy goods and services requiring more jobs to produce them (lowers unemployment)
30 2. Changing the discount rate discount rate = interest rate on fed to bank loans (set by Fed) federal funds rate = interest rate on bank to bank loans (set by fed funds market) Raising the interest rate influences how much banks will decide to borrow from the fed (who will lend them money out of thin air, increasing money supply) Keeping the discount rate low encourages borrowing
31 federal funds rate=interest rate on bank to bank loans discount rate=interest rate on fed to bank Another loans bank When the federal funds rate is lower than the discount rate, who would you borrow from? When the discount rate is lower than the federal funds rate, who would you borrow from? The fed The Fed can encourage borrowing by keeping rates low
32 currently: discount rate -.75% federal funds rate % 2006 discount rate % federal funds rate % What is the Fed trying to do?
33 Federal Open Market Committee (FOMC) controls Open Market Operations Open Market Purchases buys government securities = increases money supply Open Market Sales sells government securities = reduces the money supply 1
34 Important Background Information U.S. Department of the Treasury the agency of government responsible for paying for government and its actions collects taxes borrows money if needed It borrows from the public by offering securities» securities: promises to repay with interest at some future time
35 Open Market Purchases Fed offers to buy your government security. Thin air money is given to you. Money supply increases
36 Open Market Sales Fed offers to sell government securities it holds. You pay for it. Your money disappears into the Fed Decreases the money supply.
37 Review What are three ways the Fed can control the money supply? Reserve Requirement Discount Rate Open Market Operations
38 Review Why does the Fed want to control the money supply? Monetary Policy: maintain employment control inflation
39 Review What is the reserve requirement? If the Fed wants to reduce the money supply, what does it do to the reserve requirement? What is the discount rate? What is the federal funds rate? If the Fed wants to increase the money supply, what does it do to the discount rate?
40 Review What is the difference between an Open Market Sale and an Open Market Purchase? action? goal?
The Federal Reserve System
SECTION 3 The Federal Reserve System What Is the Federal Reserve System? In 1913, Congress passed the Federal Reserve Act. This act established the Federal Reserve System, which is also known as the Fed.
More informationEvery Breath You Take
Every Breath You Take Every Breath You Take Monetary and Fiscal Policy Chapters 10, 13, and 14! Stabilizing the Economy Controlling unemployment and inflation (Dual Mandate)! Demand Side Policies Keynesian
More informationMONEY. Economics Unit 4 Macroeconomics Just the Facts Handout
MONEY Economics Unit 4 Macroeconomics Just the Facts Handout Barter Economy A barter economy is an economy with no money. The only way you can get what you want in a barter economy is to trade something
More information16-1: THE FEDERAL RESERVE SYSTEM
16-1: THE FEDERAL RESERVE SYSTEM Learning Objective 1. I will demonstrate my understanding of the role of the Federal Reserve, our nation s central bank. What is the Federal Reserve System? It is the central
More informationHow has money changed over the centuries? What are the functions of money? Where does our money come from?
How has money changed over the centuries? What are the functions of money? Where does our money come from? Section Preview In this section, you will learn that money functions as a medium of exchange,
More informationChapter8 3/5/2018. MONEY, THE PRICE LEVEL, AND INFLATION Part 1. In this chapter: Define money and its functions
Chapter8 MONEY, THE PRICE LEVEL, AND INFLATION Part 1 https://www.yahoo.com/finance/news/feds-williams- youre-living-in-an-almost-goldilocks-economy- 191512496.html In this chapter: Define money and its
More informationMoney, Banking and the Federal Reserve System. Chapter 10
Money, Banking and the Federal Reserve System Chapter 10 Changes for the last few weeks For the next two weeks we will be doing about a chapter a day so we need to pick up the pace a little bit. You will
More informationThe Structure of the Federal Reserve System
What Tools Does Monetary Policy Use to Stabilize the Economy? (EA) Monetary policy consists of decisions made by a central bank about the amount of money in circulation and interest rates. In the United
More informationMonetary Policy CHAPTER 31. Will Rogers. There have been three great inventions since the beginning of time: fire, the wheel and central banking.
CHAPTER 31 Monetary Policy There have been three great inventions since the beginning of time: fire, the wheel and central banking. Will Rogers McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies,
More informationThe Business Cycle. jobs and spending. How do we know if the economy is prosperous or in a depression?
The Business Cycle Consumers spend their money to buy products then production increases How do we know if the economy is prosperous or in a depression? Lots of jobs and money Spending slows and jobs begin
More informationThe Federal Reserve In Action
The Federal Reserve In Action What is the Fed? Central bank of the United States Established in 1913 Purpose is to ensure a stable economy for the nation Roles & Responsibilities Conduct the nation s monetary
More information2010 Pearson Addison Wesley CHAPTER 1
CHAPTER 1 Money has taken many forms. What is money today? What happens when the bank lends the money we re deposited to someone else? How does the Fed influence the quantity of money? What happens when
More informationPrintable Lesson Materials
Printable Lesson Materials Print these materials as a study guide These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two
More information???????????????????????????????? Where does Government get their money?
Fiscal policy Taxing and spending BUDGET Proposed by the president Approved by congress What do you think the largest expenditure is for the US Government? ???????????????????????????????? Where does
More informationBANKING AND THE FEDERAL RESERVE SYSTEM
Name Date Period BANKING AND THE FEDERAL RESERVE SYSTEM BEFORE YOU BEGIN Looking at the Fill in the blank spaces with the missing words. Structure of the Fed The Federal Reserve System Functions of the
More informationEconomics Unit 14. The Federal Reserve and Monetary Policy
Economics Unit 14 The Federal Reserve and Monetary Policy These documents are being distributed for educational discussion purposes only. They do not reflect any attempt by the North East Independent School
More informationTHE FEDERAL RESERVE. and the Banking System. Functions. The FED is the central banking system of the U.S.
UNit 4.3 THE FEDERAL RESERVE and the Banking System The FED is the central banking system of the U.S. * Established 1913 * Governing Body board of governors * Presidentially-appointed Chairman JANET YELLEN
More informationTHE MEANING OF MONEY. Chapter 29. The Monetary System
Chapter 29. The Monetary System THE MEANING OF MONEY Money is the set of assets in an economy that people regularly use to buy goods and services from other people. slide 0 slide 1 The Functions of Money
More informationCH Lecture. McGraw-Hill/Irwin Colander, Economics 1-1
CH 30+31 Lecture McGraw-Hill/Irwin Colander, Economics 1-1 Money 2 The Definition and Functions of Money Money is anything that is generally accepted as payment for goods or services Money is a highly
More informationHow does the government stabilize the economy?
How does the government stabilize the economy? The government has two different tool boxes it can use: 1. Fiscal Policy- Actions by Congress and the president to adjust to the G in aggregate demand. 2.
More informationMonetary Policy Tools?
EQ: What is the Federal Reserve System? In the U.S., the Federal Reserve System was established in 1913 to discharge the function of a central bank and provide a strengthened framework of regulatory control
More informationChapter 16: The Federal Reserve and Monetary Policy Section 2
Chapter 16: The Federal Reserve and Monetary Policy Section 2 Objectives 1. Describe how the Federal Reserve serves the federal government. 2. Explain how the Federal Reserve serves banks. 3. Describe
More informationUnemployment that occurs at the natural rate of output is called:
ECON 1A Macroeconomics Lecture Notes: Chapter 11 - Aggregate Supply Aggregate Supply in the Short Run AS - relationship between the economy s price level and Assuming: Technology is fixed. Labor & AS:
More informationChapter 16: The Federal Reserve and Monetary Policy
SCHS SOCIAL STUDIES What you need to know UNIT 6 1. Describe the structure of today s Federal Reserve System 2. Describe how the Federal Reserve serves the federal government 3. Understand why some monetary
More informationEconomics Unit 3 Summary
SSEMA1 Illustrate the means by which economic activity is measured. Economic activity derives from the sectors of the economy explored in the fundamentals and microeconomics units. Individuals, businesses,
More informationFinancial Literacy Course. East High School Module 3
Financial Literacy Course East High School Module 3 What will you learn about? Choosing a banking account Types of banks The banking system Bank Accounts Types of Bank Accounts Checking Account Allows
More informationGovernment Policy and Regulation on the Financial-Services Industry
Government Policy and Regulation on the Financial-Services Industry 2-1 Key Topics The Principal Reasons for Banking and Financial- Services Regulation Major Financial-Services Regulators and Laws Some
More informationMultiple Choice Identify the letter of the choice that best completes the statement or answers the question.
Chapter 16 review Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Why does the Federal Reserve alter monetary policy? a. to regulate the
More informationMoney, Banking and the Federal Reserve
Money, Banking and the Federal Reserve What Is Money? Money is any asset that can easily be used to purchase goods and services. Fiat money : Money, such as paper currency, that is authorized by a central
More informationExercise Chap 34. Student:
Exercise Chap 34 Student: 1. A decrease in the interest rate will cause a(n): A. Increase in the transactions demand for money B. Decrease in the transactions demand for money C. Decrease in the amount
More information4.0 Understand the Role of Finance in Business
4.0 Understand the Role of Finance in Business Competency 4.02 Understand the Banking System Objective 4.02-A Analyze the roles/responsibilities of the Federal Reserve. The Federal Reserve System What
More informationBusiness Cycle & Economic Indicators. Understanding the past Seeing the future!
Business Cycle & Economic Indicators Understanding the past Seeing the future! Review #1: What is the ideal range for the GDP growth rate, that allows for job creation without too much inflation? 2-5%
More informationThe Federal Reserve and Open Market Operations PRINCIPLES OF ECONOMICS (ECON 210) BEN VAN KAMMEN, PHD
The Federal Reserve and Open Market Operations PRINCIPLES OF ECONOMICS (ECON 210) BEN VAN KAMMEN, PHD What is the Federal Reserve System? The Federal Reserve: Creates money (widely accepted means of payment:
More informationMonetary Policy: Regulating Money Supply
Monetary Policy: Regulating Money Supply Review Quiz Trade Quiz #1: What are the two conflicting responsibilities of the Federal Reserve? Maximizing GDP & Employment while at the same time keeping inflation
More informationSection 5 - The Financial Sector
Section 5 - The Financial Sector Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Which of the following assets is the MOST liquid? A. checkable bank deposits
More informationMacroeconomic and Interest Rate Outlook
Macroeconomic and Interest Rate Outlook 217 Agricultural Lenders Conference Brian C. Briggeman Professor and Director of the Arthur Capper Cooperative Center The economic recovery appears to be finding
More informationThe Federal Reserve and Monetary Policy
The Federal Reserve and Monetary Policy Overview In this lesson, students will gain an overview of the Federal Reserve and monetary policy. Students will learn how the FED manipulates the money supply
More informationThe Monetary System CHAPTER. Goals. Outcomes
CHAPTER 29 The Monetary System Goals in this chapter you will Consider what money is and what functions money has in the economy Learn what the Federal Reserve System is Examine how the banking system
More informationName: Preview. Use the word bank to fill in the missing letters. Some words may be used more than once. Circle any words you already know.
Preview. Use the word bank to fill in the missing letters. Some words may be used more than once. Circle any words you already know. Advance Organizer Banks, Credit & the Economy Preview. Use the word
More informationSV151, Principles of Economics K. Christ 6 9 February 2012
SV151, Principles of Economics K. Christ 6 9 February 2012 SV151, Principles of Economics K. Christ 9 February 2012 Key terms / chapter 21: Medium of exchange Unit of account Store of value Liquidity Commodity
More informationCHAPTER 31 Money, Banking, and Financial Institutions
CHAPTER 31 Money, Banking, and Financial Institutions Answers to Short-Answer, Essays, and Problems 1. What is money? Explain in terms of the functions of money. Money is whatever performs the three basic
More information16-3: Monetary Policy. Notes
16-3: Monetary Policy Notes I will gain an understanding of the three tools used by the Fed I will gain an understanding of when the Fed uses expansionary and contractionary monetary policy. Monetary Policy
More information28 Monetary Policy and Bank Regulation
28 Monetary Policy and Bank Regulation Figure 28.1 Marriner S. Eccles Federal Reserve Headquarters, Washington D.C. Some of the most influential decisions regarding monetary policy in the United States
More information9.3 The Federal Reserve System L E A R N I N G O B JE C T I V E S
2. Acme Bank s balance sheet after losing $1,000 in deposits: Figure 9.11 Required reserves are deficient by $800. Acme must hold 20% of its deposits, in this case $1,800 (0.2 x $9,000=$1,800), as reserves,
More informationPractice Test Macroeconomics Spring 2008 Chapter 16 The Monetary System
Practice Test Macroeconomics Spring 2008 Chapter 16 The Monetary System MULTIPLE CHOICE 1. Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate? a. store
More informationBACKGROUNDER. Monetary policy refers to altering the amount of money in an. The Fed at 100: A Primer on Monetary Policy.
BACKGROUNDER No. 2876 The Fed at 100: A Primer on Monetary Policy Norbert J. Michel, PhD Abstract The Federal Reserve is the official central bank of the United States and is responsible for U.S. monetary
More informationSecond Midterm (typo corr.)
Name Signature Econ 520 S11a Second Midterm (typo corr.) 1 hour, 48 minutes. Closed book, notes, cell phones, Twitter links, etc. Graphing calculators, PDAs etc. may not be used. A non-graphing calculator
More information$300 billion $900 billion $20 billion $500 billion $200 billion $90 billion $0
1. When an asset is general! y accepted as a means of payment for goods and services: a. it must be backed by a specific commodity, such as gold or silver. b. it is also one of the best stores of wealth.
More informationThe Federal Reserve Banking System. K. Maldonado IB Business & Finance John A. Ferguson Senior High School
The Federal Reserve Banking System K. Maldonado IB Business & Finance John A. Ferguson Senior High School Why a Federal Reserve System? During the early twentieth century, there was a series of panics
More informationChapter 14. Monetary Policy
Chapter 14 Monetary Policy Copyright 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Chapter 14 The goal of
More informationChapter 10. Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics. Chapter Preview
Chapter 10 Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics Chapter Preview Monetary policy refers to the management of the money supply. The theories guiding the Federal Reserve are complex
More informationChapter 14: Money, Banks, and the Federal Reserve System
Chapter 14: Money, Banks, and the Federal Reserve System Yulei Luo SEF of HKU March 28, 2016 Learning Objectives 1. De ne money and discuss its four functions. 2. Discuss the de nitions of the money supply.
More informationMONEY, BANKS, AND THE FEDERAL RESERVE*
Chapter 10 MONEY, BANKS, AND THE FEDERAL RESERVE* What Is Money? Topic: What Is Money? * 1) The functions of money are A) medium of exchange and the ability to buy goods and services. B) medium of exchange,
More informationBasic Finance. The Federal Reserve. An introduction to financial institutions, investments & Management Eleventh Edition.
Basic Finance The Federal Reserve 5 An introduction to financial institutions, investments & Management Eleventh Edition 1 U.S. Treasury Federal Reserve 2 Economy 3 U.S. Treasury Prints money IRS...collects
More informationMacro Problem Set 3 Fall 2015
Macro Problem Set 3 Fall 2015 Directions: The True/False and Multiple Choice questions do not have to be turned in for credit. It would be foolish, however, not to spend a great deal of time working on
More information3. Financial Markets, the Demand for Money and Interest Rates
Fletcher School of Law and Diplomacy, Tufts University 3. Financial Markets, the Demand for Money and Interest Rates E212 Macroeconomics Prof. George Alogoskoufis Financial Markets, the Demand for Money
More informationUNITS 12-13: FIXING AN ECONOMY: FISCAL & MONETARY POLICY WORKSHEET USE THE LECTURE NOTES TO ANSWER THE FOLLOWING QUESTIONS (10 pts each)
DUE DATE: NAME: UNITS 12-13: FIXING AN ECONOMY: FISCAL & MONETARY POLICY WORKSHEET USE THE LECTURE NOTES TO ANSWER THE FOLLOWING QUESTIONS (10 pts each) 1. John Keynes suggested that government should
More informationThe Demand for Money p Explain the two reasons people demand to hold their wealth in the form on money.
Financial Sector Reading Guide Chapters 13, 14 and 15 Chapter 13: Money and Banking 1. Identify and describe the functions of money. 2. Define money supply and other financial assets. 3. Define and list
More informationMONEY, THE PRICE LEVEL, AND INFLATION
25 MONEY, THE PRICE LEVEL, AND INFLATION What is Money? Money is any commodity or token that is generally acceptable as a means of payment. A means of payment is a method of settling a debt. Money has
More informationTopic 8 : The Interwar Globalization Backlash
Topic 8 : The Interwar Globalization Backlash Department of Economics University of Warwick March, 2014 We focus on the monetarist view : It was the Fed s policy mistake ignoring the importance of money
More informationThe Federal Reserve System
The Structure of Central Banks: The U.S. Federal Reserve and the European Central Bank McGraw-Hill/Irwin Copyright 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Twelve Regional Banks 16-2
More informationThe Federal Reserve & Monetary Policy
The Federal Reserve & Monetary Policy Essential Standards SSEMA2B: Describe the organization of the Federal Reserve System (12 Districts, Federal Open Market Committee (FOMC), and Board of Governors. SSEMA2C:
More informationCHAPTER 10: MONEY, BANKS AND THE FEDERAL RESERVE
CHAPTER 10: MONEY, BANKS AND THE FEDERAL RESERVE Learning Goals To know what is money To know how banks create money To know the structure of the Federal Reserve System To know how the Fed controls the
More informationI. Learning Objectives II. The Functions of Money III. The Components of the Money Supply
I. Learning Objectives In this chapter students will learn: A. The functions of money and the components of the U.S. money supply. B. What backs the money supply, making us willing to accept it as payment.
More informationJason Henderson Vice President and Branch Executive Federal Reserve Bank of Kansas City Omaha Branch March 2, 2012
Jason Henderson Vice President and Branch Executive March 2, 2012 The views expressed are those of the author and do not necessarily reflect the opinions of the Federal Reserve Bank of Kansas City or the
More informationIntroduction. Learning Objectives. Chapter 16. Money Creation, the Demand for Money, and Monetary Policy
Copyright 2011 by Pearson Education, Inc. Chapter 16 Money Creation, the Demand for Money, and Monetary Policy All rights reserved. Introduction Prior to October 2008, U.S. banks typically held about $2
More informationMONEY, THE PRICE LEVEL, AND INFLATION
24 MONEY, THE PRICE LEVEL, AND INFLATION After studying this chapter, you will be able to: Define money and describe its functions Explain the economic functions of banks Describe the structure and functions
More information5. What is the Savings-Investment Spending Identity? Savings = Investment Spending for the economy as a whole
Unit 4 Test Review KEY Savings, Investment and the Financial System 1. What is a financial intermediary? Explain how each of the following fulfills that role: Financial Intermediary: Transforms funds into
More informationThe Monetary System. Sherif Khalifa. Sherif Khalifa () The Monetary System 1 / 33
The Monetary System Sherif Khalifa Sherif Khalifa () The Monetary System 1 / 33 Money is the set of assets in an economy that people use to buy goods and services from other people. Money is the stock
More informationThe Monetary System P R I N C I P L E S O F. N. Gregory Mankiw. What Money Is and Why It s Important
C H A P T E R 29 The Monetary System P R I N C I P L E S O F Economics N. Gregory Mankiw What Money Is and Why It s Important Without money, trade would require barter, the exchange of one good or service
More informationThe Monetary System. Sherif Khalifa. Sherif Khalifa () The Monetary System 1 / 32
The Monetary System Sherif Khalifa Sherif Khalifa () The Monetary System 1 / 32 Money is the set of assets in an economy that people use to buy goods and services. Money is the stock of assets that can
More informationIntroduction to the FOMC
Portland State University Reed College November 30, 2006 Introduction to the FOMC Yelena Takhtamanova, Economist Renee Courtois, Research Analyst Federal Reserve Bank of San Francisco Outreach Economists
More informationThe Federal Reserve System and Central Banking in the US
The Federal Reserve System and Central Banking in the US Christ University, Bangalore, India March 10, 2014 Sonya Ravindranath Waddell Regional Economist Overview A Little History of the Federal Reserve
More information12/03/2012. What is Money?
Money has taken many forms. What is money today? What happens when the bank lends the money we re deposited to someone else? How does the Bank of Canada influence the quantity of money? What happens when
More informationThe Federal Reserve. 1 of 5. The history and functions of the United States' central bank
This website would like to remind you: Your browser (Apple Safari 4) is out of date. Update your browser for more security, comfort and the best experience on this site. Article The Federal Reserve The
More informationTHE FEDERAL RESERVE AND MONETARY POLICY Macroeconomics in Context (Goodwin, et al.)
Chapter 12 THE FEDERAL RESERVE AND MONETARY POLICY Macroeconomics in Context (Goodwin, et al.) Chapter Overview In this chapter, you will be introduced to a standard treatment of central banking and monetary
More informationECO 100Y INTRODUCTION TO ECONOMICS
Prof. Gustavo Indart Department of Economics University of Toronto ECO 100Y INTRODUCTION TO ECONOMICS Lecture 15. MONEY, BANKING, AND PRICES 15.1 WHAT IS MONEY? 15.1.1 Classical and Modern Views For the
More informationChapter 29: The Monetary System Principles of Economics, 8 th Edition N. Gregory Mankiw Page 1
Page 1 1. Introduction a. This is a fairly descriptive chapter, but it contains some important material for understanding the world that we live in. b. Money is important for facilitating trade. c. Paper
More informationWrite your answers on the exam paper. You are encouraged to write comments on the exam paper as well.
Econ 353 Money, Banking and Financial Markets Summer 2008 Exam 3 Name ID # Note: Questions 1-20 worth 4 points each; Questions 21 worth 20 points; Write your answers on the exam paper. You are encouraged
More informationTerm used to refer to the Federal Reserve System/Bank.
Federal Reserve The Fed Term used to refer to the Federal Reserve System/Bank. They are the government s fiscal agent Hold and set reserve requirements Clear checks Supervise member banks Supply paper
More informationOUTLINE November 1, Review: PPF & AD. How close an output gap? Output Gap & Multiplier 10/31/2017 1:25 PM. Overview of Policy
OUTLINE November 1, 2017 Overview of Policy Contractionary and Expansionary Policy Fiscal and Monetary Policy The Financial Crisis of 2007-09 Great Recession Midterm tonight (if that s news, we should
More informationMonetary Policy Agenda. The Federal Reserve System. The Federal Reserve System. The Federal Reserve System. The Federal Reserve System
Monetary Policy Agenda Introduction to Monetary Policy.. Created by an Act of Congress. on December 23, 1913. The nation s central bank. How the Federal Reserve Really Controls the Money Supply. The Fractional
More informationLecture 6. The Monetary System Prof. Samuel Moon Jung 1
Lecture 6. The Monetary System Prof. Samuel Moon Jung 1 Main concepts: The meaning of money, the Federal Reserve System, banks and money supply, the Fed s tools of monetary control Introduction In the
More informationMoney and Monetary Policy. Economic Forces in American History
Money and Monetary Policy Money & Monetary Policy: Outline Central Banks Macroeconomic Models Monetary Policy in Modern Economies Martha Olney (U.C. Berkeley) Olney@Berkeley.edu 2 A Bankers bank Central
More information29 THE MONETARY SYSTEM
29 THE MONETARY SYSTEM WHAT S NEW IN THE FOURTH EDITION: There is a new FYI box on The Federal Funds Rate. There is also a new In the News box on The History of Money. LEARNING OBJECTIVES: By the end of
More informationGO ON TO THE NEXT PAGE. -8- Unauthorized copying or reuse of any part of this page is illegal.
30. Which of the following is most likely to be caused by an adverse supply shock? (A) Structural unemployment (B) Frictional unemployment (C) Demand-pull inflation (D) Cost-push inflation (E) Deflation
More informationThe Federal Reserve and Monetary Policy 1
The Federal Reserve and Monetary Policy 1 We have examined the money market using the supply and demand framework developed earlier in the class. We now turn our attention to how monetary policy is conducted,
More informationIntroduction. Learning Objectives. Learning Objectives. Chapter 15. Money, Banking, and Central Banking. Define the fundamental functions of money
Chapter 15 Money, Banking, and Central Banking Introduction About 20 billion new U.S. coins will be put into circulation this year, and new paper currency will be printed as well. These new coins and currency
More informationMacroeconomics CHAPTER 13
Macroeconomics CHAPTER 13 Money, Banking, and the Federal Reserve System PowerPoint Slides by Can Erbil 2006 Worth Publishers, all rights reserved What you will learn in this chapter: The various roles
More informationMacro Federal Reserve Highlights WCC
Macro Federal Reserve Highlights WCC Federal Reserve ystem Established in 1913 Central bank of the United tates (really our third) Bank of England, Bundesbank Roles of a central bank Control the size of
More informationBanking Chapter 3 Study Guide
Name: Class: Date: Banking Chapter 3 Study Guide True/False Indicate whether the sentence or statement is true or false. 1. The flow of money has a direct effect on how the economy performs. 2. Liquidity
More informationUnit 4: Money, Banking, and Monetary Policy
Unit 4: Money, Banking, and Monetary Policy 1 Showing the Effects of Monetary Policy Graphically Three Related Graphs: Money Market Investment Demand AD/AS 2 Interest Rate (i) S&D of Money S M S M1 Interest
More informationCity of San Juan Capistrano
City of San Juan Capistrano Fourth Quarter 2013 Portfolio and Market Review Sarah Meacham, Director PFM Asset Management LLC Federal Reserve Taper Talk Drives Interest Rates The Federal Open Market Committee
More informationSupply CHAPTER SUMMARY CHAPTER ASSESSMENT
CHAPTER FOCUS SECTION 1 Organization and Functions of the Federal Reserve System SECTION 2 SECTION 3 Money Supply and the Economy Regulating the Money Supply CHAPTER SUMMARY CHAPTER ASSESSMENT 2 Click
More information10/21/2018. Chapter 16. Learning Objectives. Central Banks. Functions and objectives of central banks. Features of an effective central bank.
Chapter 16 Central Banks (in the world today) and the Federal Reserve System Learning Objectives Functions and objectives of central banks. Features of an effective central bank. Federal Reserve organization
More informationMoney. What is Money? 3 Uses of Money #1 Medium of Exchange #2 Unit of Account. #3 Store of Value. 6 Characteristics of. Money.
What is Money? Suppose a generous relative gave you a gift of $1000 for your high school graduation. In a short paragraph outline what you would do with the money and the reason behind your decision. Can
More informationDEVELOPMENT OF THE U.S. BANKING SYSTEM
DEVELOPMENT OF THE U.S. BANKING SYSTEM 2.1 Creation of a National Currency 2.2 Banking Before 1913 2.3 Modern Banking Slide 1 Cengage/South-Western GOALS 2.1 CREATION OF A NATIONAL CURRENCY Identify different
More informationThe Federal Reserve, Monetary Policy, and Economic Indicators
The Federal Reserve, Monetary Policy, and Economic Indicators Megan Williams Associate Economist Federal Reserve Bank of Kansas City, Oklahoma City Branch The Creation of the Fed The first two national
More informationMotives for holding money
Money Financial asset that pays a relatively low return -- why do people hold it? Fractional reserve banking -- the money creation process. Banking panics and bank runs. Motives for holding money Medium
More informationUnderstanding the American Federal Reserve
Understanding the American Federal Reserve The Federal Reserve headquarters is in Washington, DC. The basic structure of the Federal Reserve System includes: The Federal Reserve Board of Governors The
More information