Monday November 26 2007

Monday November 26 2007 - resort. The discount rate is the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Monetary policy *Monetary policy makes the Federal Reserve responsible for 1) Full employment - 2) price stability 3) economic growth 3 Major tools of the Federal open market operations- most important thing on a daily basis the fed does. When the fed buys there putting loquity in the system. Interest rate should go lower. On a daily basis the open market operations is how the fed on an opne market economy tweaks the economy. Reserve requirements- the sledgehammer, are had to allow the Federal Reserve to control the money supply and credit to get their goals done. Adjust the reserve requirements. Discount rate- relatively minor. Lending money to banks. The fed is the lender of last
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: resort. The discount rate is the rate they charge banks when they need money. Federal funds are reserves. Relations ship between the federal funs rate and the discount rate. Prime rate- what the banks were giving to the most trustworthy of customers. Individual banks set the prime rate. Bank panics- Cyclical asymmetry- even when money is put in the system there is no guarantee there gonna use it. The federal reserve has many ways they control the free market Artful management- Alan Greenspan Inflation targeting...
View Full Document

This note was uploaded on 04/12/2008 for the course ECO 1000C taught by Professor Lawrence during the Spring '08 term at St. Johns Duplicate.

Ask a homework question - tutors are online