Unformatted text preview: The Federal Reserve tweaks monetary policy. Cyclical Asymmetry- Expansionary monetary policy = easy money 3 major tools of the Federal Reserve 1) Open market operations 2) Reserve requirements 3) Discount rate When the federal banks buys they put cash out and they take securities back. When you put money into the system excess reserves increase because there is more money in the system. Money rate rises intrest rates fall. Money supplies contrated interest rateds rise. Investment money increase 1)rates fall Federal reserve sells bonds....
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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.
- Spring '08
- Interest Rates