ECON 330: Money and BankingFall 2007Section 1: Tuesday and Thursday, 11:30AM-12:45PM, SMU 104Section 2: Tuesday and Thursday, 5:00PM-6:15PM, SRO BProf. J. SantosSouth Dakota State UniversityStudent Learning Objectives: Chapter 13: Multiple DepositCreation and the Money Supply Process Identify and provide examples of liabilities of the Federal Reserve System. Identify and provide examples of assets of the Federal Reserve System. De°ne, in the context of Federal Reserve liabilities, the monetary base. De°ne, compare and contrast required and excess reserves. De°ne the term open market operations. Identify the e/ects, on the monetary base, of open market purchases andsales of securities. Explain why open market operations have relatively more predictablee/ects on the monetary base as opposed to reserves. Explain how shifts from deposits to currency in circulation a/ect bankreserves and the monetary base. Explain how changes in discount loans a/ect bank reserves and themonetary base. De°ne the term ±oat. Explain how changes in the ±oat a/ect bank reserves and the monetarybase. Use the simple deposit multiplier to compute the change in deposits thatresults from a change in bank reserves. Identify and provide examples of two critiques of the simple depositmultiplier model.
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Chapter 13: Multiple Deposit Creation and the Money Supply ProcessEcon 330: Money and BankingFall 2007Prof. Joseph SantosDepartment of Economics South Dakota State UniversityThis outline draws from Frederic Mishkin’s Money, Banking and Financial Markets(2007) and, as such, contains copy written material. Please do not quote without proper citation.