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 – π 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”...
View Full Document
This note was uploaded on 04/09/2008 for the course ECON 2000 taught by Professor Roussell during the Spring '06 term at LSU.
- Spring '06
- Monetary Policy