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Unformatted text preview: ii. Reserve requirements- minimum amount of vault cash and deposits with the Fed that must be maintained by a bank iii. Money multiplier- amount of money the banking system generates with each dollar of reserves Insert formula II. Ch. 15 a. Federal Reserve System- the central bank of the U.S. i. Structure of the Fed 1. Board of Governors 2. Federal Open Market Committee 3. Reserve Banks ii. Functions of the Federal Reserve System- see page 442 b. Monetary Policy- changing the economy’s money supply to assist the economy in achieving maximum output and employment and also stable prices. i. Open market operations: the purchase or sale of securities by the Fed ii. Discount rate: the rate that Fed banks charge other banks for loans iii. Reserve requirement: changing how much vault cash and deposits with the Fed that must be maintained by a bank c. Advantages and Disadvantages of Monetary Policy...
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- Fall '07
- Monetary Policy, Cheque, Federal Reserve System