Presentation is loading. Please wait.

Presentation is loading. Please wait.

Ch. 14 The Federal Reserve.

Published byOlivia Michelsen Modified over 5 years ago

Similar presentations

Presentation on theme: "Ch. 14 The Federal Reserve."— Presentation transcript:

1 Ch. 14 The Federal Reserve

2 Federal Reserve System (FED)
a. established to protect the savings of the American people in the event of a bank failure b. the Constitution gives congress the authority to print money c. National Bank of the United States d. Divided into 12 districts

3 Federal Reserve Cont’d
e. the board of directors are appointed by the president f. current chairman is Janet Yellen g. the current FDIC limit per customer is $250,000

4 Money Supply h. Attempts to control the money supply to prevent
Inflation (increase spending, & prices, decrease in value of money) recession (decrease spending, prices, increase in unemployment)

5 Major duties of the Fed a. Print paper money
b. Regulate & supervises member banks c. Acts as the governments bank d. Check clearing services

6 Fed Duties Continued e. Hold reserve accounts for member banks
1. bank’s checking account at the Fed 2. % of money that can’t be lent out/keeps banks “healthy” 3. Fed sets the rate (reserve requirement) 4. Banks use their excess reserves to make loans/make profit

7 Fed Duties Continued f. Maintains the money supply (Monetary Policy)
1. determines how much money will be in circulation 2. too much causes inflation -need to decrease money supply (tight money policy) 3. too little causes recession/depression/unemployment -need to increase money supply (easy money policy)

8 Conducting Monetary Policy
4. Methods used: a. Change the reserve requirement -amount banks have for loans Reserve Requirement (R.R.) - Decrease R.R. = Money Supply (allows more loans b/c it frees up reserves) - Increase R.R. = Money Supply (forces banks to hold more $$$ in reserves).

9 Monetary Policy cont’d
2nd method used: B. Open-market operations -buy/sell govt. securities (bonds) Open-market operations Buy govt. securities = Money Supply Sell govt. securities = Money Supply

10 Monetary Policy cont’d
Final method used: c. Change discount rate -interest rate charged to banks for taking loans Changing the discount rate (D.R.) - Decrease discount rate = Money Supply (encourages banks to loan out more $$$) - Increasing the discount rate = Money Supply (makes banks less willing to borrow $$$ from the Fed)

Download ppt "Ch. 14 The Federal Reserve."

Similar presentations

Federal Reserve and Macroeconomic Policy

Federal Reserve and Macroeconomic Policy
The Federal Reserve System and Monetary Policy

The Federal Reserve System and Monetary Policy
Fiscal & Monetary Policy How the Federal Government can Influence the American Economy How the Federal Government can Influence the American Economy.

Fiscal & Monetary Policy How the Federal Government can Influence the American Economy How the Federal Government can Influence the American Economy.
MONETARY POLICY Actions the Federal Reserve takes to influence the level of GDP and the rate of inflation in the economy.

MONETARY POLICY Actions the Federal Reserve takes to influence the level of GDP and the rate of inflation in the economy.
The Federal Reserve “The Fed”. The Fed The Federal Reserve is our nation’s bank Their customers are: 1.The Government 2.Banks – Wells Fargo, Bank of America.

The Federal Reserve “The Fed”. The Fed The Federal Reserve is our nation’s bank Their customers are: 1.The Government 2.Banks – Wells Fargo, Bank of America.
Chapter 15 The Federal Reserve System & Monetary Policy

Chapter 15 The Federal Reserve System & Monetary Policy
Section 1: Organization of the Federal Reserve System  Government Bank  Established in 1913  Impacts how you spend, invest, and borrow money  Is in.

Section 1: Organization of the Federal Reserve System  Government Bank  Established in 1913  Impacts how you spend, invest, and borrow money  Is in.
THE FEDERAL RESERVE SYSTEM The Fed was created in 1914 after a series of bank failures convinced Congress that the United States needed a central bank.

THE FEDERAL RESERVE SYSTEM The Fed was created in 1914 after a series of bank failures convinced Congress that the United States needed a central bank.
Federal Reserve System. The Role of the Federal Reserve Provides financial services to the government Regulates financial institutions Maintains the payment.

Federal Reserve System. The Role of the Federal Reserve Provides financial services to the government Regulates financial institutions Maintains the payment.
Monetary Policy Control of money supply (M) and interest rates (i)

Monetary Policy Control of money supply (M) and interest rates (i)
Chapter 15: The Fed and Monetary Policy Chapter 15.1: The Federal Reserve System Chapter 15.2: Monetary Policy Chapter 15.3: Monetary Policy, Banking,

Chapter 15: The Fed and Monetary Policy Chapter 15.1: The Federal Reserve System Chapter 15.2: Monetary Policy Chapter 15.3: Monetary Policy, Banking,
The Fed Chapter 16. A Stronger Fed In 1935, Congress adjusted the Federal Reserve structure so that the system could respond more effectively to crises.

The Fed Chapter 16. A Stronger Fed In 1935, Congress adjusted the Federal Reserve structure so that the system could respond more effectively to crises.
Federal Reserve Notes Structure & Functions. I. Purpose: to keep the economy stable  Goals: high employment, stable prices, economic growth  Enemies:

Federal Reserve Notes Structure & Functions. I. Purpose: to keep the economy stable  Goals: high employment, stable prices, economic growth  Enemies:
The Federal Reserve System and Monetary Policy. Money Final payment for goods and services Purposes of money: – Medium of Exchange: It can be used to.

The Federal Reserve System and Monetary Policy. Money Final payment for goods and services Purposes of money: – Medium of Exchange: It can be used to.
Monetary Policy Ch19 Notes. I. Monetary Policy A. Functions of the “the Fed” 1. To keep the money supply in check so that the economy does not have a.

Monetary Policy Ch19 Notes. I. Monetary Policy A. Functions of the “the Fed” 1. To keep the money supply in check so that the economy does not have a.
Chapter 15.  Over 30,000 different currency  Anyone could create currency  Some currencies worth more than others  Some banks didn’t keep enough reserve.

Chapter 15.  Over 30,000 different currency  Anyone could create currency  Some currencies worth more than others  Some banks didn’t keep enough reserve.
Actions of the Federal Reserve

Actions of the Federal Reserve
A. Fed and The National Gov’t 1. Federal Government’s Banker  The Fed maintains a checking account for the Treasury Department and processes payments.

A. Fed and The National Gov’t 1. Federal Government’s Banker  The Fed maintains a checking account for the Treasury Department and processes payments.
AIM:How does the Federal Reserve handle monetary policy? https://www.youtube.com/watch?v=I2m3t2 Yr8Vghttps://www.youtube.com/watch?v=I2m3t2 Yr8Vg Do Now:

AIM:How does the Federal Reserve handle monetary policy? Yr8Vghttps:// Yr8Vg Do Now:
THE FEDERAL RESERVE SYSTEM. THE PROBLEM Up until the early 1900s, many banks lacked adequate reserves to meet the needs of the public Banks operated on.

THE FEDERAL RESERVE SYSTEM. THE PROBLEM Up until the early 1900s, many banks lacked adequate reserves to meet the needs of the public Banks operated on.

Similar presentations

Ads by Google