1. First edition Global Economic Issues and Policies PowerPoint Presentation by Charlie Cook Copyright © 2003 South-Western/Thomson Learning. All rights reserved. Chapter 9 Global Money and Banking— Where Central Banks Fit into the World Economy

2. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–2 Figure 9-1 The Number of Central Banking Institutions, 1670–Present Source: Forrest Capie, Charles Goodhart, and Norbert Schnadt, “The Development of Central Banking,” in Capie, et al., The Future of Central Banking: The Tercentenary Symposium of the Bank of England Cambridge, U.K.: Cambridge University Press, 1994, pp. 1–231.

3. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–3 Table 9-1a The Consolidated Balance Sheet of the Federal Reserve System Source: Data from Federal Reserve Bulletin, May 2002, Board of Governors of the Federal Reserve System.

4. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–4 Table 9-1b The Consolidated Balance Sheet of the European Central Bank Source: Data from European Central Bank, Monthly Report, April 2002.

5. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–5 Table 9-1c The Consolidated Balance Sheet of the Bank of Japan Source: Data from Bank of Japan, June 2002.

6. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–6 M1: Currency, transactions deposits, and travelers’ checks make up the broad category generally known as money. Savings deposits and money market deposit accounts at depository institutions Small-denomination time deposits at depository institutions Funds held by individuals, brokers, and dealers in money market mutual funds Overnight repurchase agreements at depository institutions and overnight Eurocurrency deposits held by domestic residents (other than depository institutions) at foreign branches of domestic depository institutions Table 9-2 Components of M2

7. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–7 Figure 9-2 The Equilibrium Interest Rate and Monetary Policy

8. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–8 Figure 9-3 U.S. Gross Domestic Product Source: Economic Report of the President, 2002, and Economic Indicators, various issues.

9. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–9 Figure 9-4a Nominal and Real GDP Values Since 1959 Source: Economic Report of the President, 2002, and Economic Indicators, various issues.

10. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–10 Figure 9-4b Annual Values of the U.S. GDP Deflator Since 1959 Source: Economic Report of the President, 2002, and Economic Indicators, various issues.

11. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–11 Figure 9-5 Aggregate Demand, Aggregate Supply, and Equilibrium

12. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–12 Figure 9-6 The Effects of an Expansionary Monetary Policy Action on Equilibrium Output and Prices

13. Copyright © 2003 South-Western/Thomson Learning. All rights reserved.9–13 Figure 9-7 Combined U.S., German, and Japanese Interventions, February 1985 to August 1989 Source: XSource: Michael Bordo and Anna Schwartz, “What Has Foreign Exchange Market Intervention Since the Plaza Agreement Accomplished?” Open Economies Review, 2 (1) (1991): 39–64.