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Published byRalph Goodwin Modified over 9 years ago
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The Federal Reserve System
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Who do you think is the most powerful person in the world? http://www.forbes.com/powerful-people/ http://www.forbes.com/powerful-people/ Check out this website for HW and read the article about the most powerful people in the world
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Goals of the FED Full employment Price stability Economic growth through moderate long term interest rates and the stability of the financial system
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Structure of the Fed Chairman ( now titled “Madame Chair”) Board of Governors FOMC District Banks
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Functions of the FED Provide Financial services Supervise and regulate banks Maintain stability of the financial system Conduct monetary policy
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Tools of the FED Discount rate Reserve requirement OMO Interest on the reserve ( new tool as of 2008)
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Tools and the money creation process How can each tool be used to change the money supply?
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2 types of Monetary Policy Monetary Policy is counter-cyclical Expansionary- “Easy money” Contractionary- “Tight money”
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Balance Sheets Left side shows assets’ Right side shows liabilities Both sides must be equal Net worth equals assets minus liabilities
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