1. Monetarism and the Economy
Stabilizing the Economy

2. Federal Reserve Federal Reserve System or Fed Monetary Policy
Created by Congress in 1913 as the nation’s central banking organization
Responsible for monetary policy in the United States
Monetary Policy
Changing the rate of growth of the supply of money in circulation in order to affect the cost and availability of credit

3. Fed at Washington D.C.

7. Theory of Monetarism Monetarism Monetarists beliefs
The relationship between the amount of money the Fed places in circulation and the level of activity in the Economy.
Monetarists beliefs
The fed should increase the money supply at a smooth, given percent each year.

8. Working with Monetary Policy
Explain how the growth of the supply of money will help decrease unemployment?
Explain what will happen if the economy is at full employment and the money supply is still increased?

9. Milton Friedman