Do Now: What do you already know about the Federal Reserve?

 Federal Reserve System  12 Federal Reserve Regions  Board of Governors  President appoints  7 members  14 year term  Why????

 Establish Monetary Policy  Easy Money Policy  When? Why?  Tight Money Policy  When? Why?

 Tools of the Fed  Reserve Requirement  define – 

 Tools of the Fed  Discount Rates  Define 

 Tools of the Fed  Open Market Operations  Define 

1. Name 3 tools the Fed uses to influence money supply. 2. If our economy is in the contraction phase of the business cycle would the Fed act to increase or decrease money supply? Explain.

1. If our economy was in the expansion phase of the business cycle, would the Fed increase or decrease discount rate? 2. If the Fed feared increased rates of inflation would the Fed act increase or decrease money supply? What would the Fed do to reserve requirements?

 If our economy was in recession, would the Fed buy or sell government securities (OMOs)? Explain.  The Fed would enact a tight monetary policy during the ___________ phase of the business cycle and an easy money policy during the ________________ phase of the business cycle.

 Why are the members of the Fed’s Board of Governor’s appointed by the President to 14 year terms?  Why might some argue that the Chairman of the Federal Reserve is the most influential individual in the United States? Do you agree?