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Unformatted text preview: (+) d. Graphical representation 2. Money Supply a. Function of Fed policy b. Determinants: Change in supply i. Increase: Open Market Purchase ii. Decrease: Open Market Sale 3. Equilibrium: quantity demanded = quantity supplied (as always) 4. Examples C. How does the Fed control the real interest rate? 1. Recall: r = i e 2. Open market operations control i 3. In the short run, expected inflation rates do not change III: NEXT TIME A. Continue Chapter 14: Stabilizing the Economy: The Role of the Fed...
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- Spring '06
- Monetary Policy