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Unformatted text preview: M2- M1 + savings deposits/small time deposits/money market mutual funds/few minor catagories Federal Reserve (Fed) regulates banks, insures health of system, controls money supply through open market operations. FOMC is in fed, meets 6 weeks/ banks make loans, money supply increases Fed controls money supply through open market operations/reserve requirement/discount rate Open marketbuying/selling bonds, reserve requirement- fraction of banks reserves that may not be loaned Discount rate- interest rate Fed charges banks for loans, increase in last 2 = less money supply, opp=opp Problems-people keeping their money, banks not loaning all or loaning too much, etc....
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This note was uploaded on 04/17/2008 for the course ACG 2021 taught by Professor Hornik during the Spring '08 term at University of Central Florida.
- Spring '08
- Financial Accounting