1. Functions of the Federal Reserve
Unit 16.2

2. Serving the Banking System
Check Clearing
Lending Money
Regulating and Supervising Banks
Bank Holding Company
Controls more than one bank
Bank Exams
Audits of Financial Practices

3. Serving the Federal Government
Paying the Government Bills
Selling Government Securities
Distributing Currency

4. Creating Money Money Creation Required Reserve Ratio (RRR)
Deposit Multiplier Formula
Where 10% is kept and 90% become the basis for new loans (RRR=10%)
(1/RRR)=Deposit expansion multiplier

5. Factors Affecting Demand for Money
Cash on Hand
Interest Rates
Cost of Consumer Goods and Services
Level of Income