10-8-07 - -Money is currency Deposits-when you deposit...

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-Money is currency + Deposits -when you deposit money: -bank holds reserves -bank makes loans Federal Reserve System (FED) -every country has a “central Bank,” bank for banks -Fed is U.S. central bank -Fed controls the money supply Fed consists of 1) Board of governors -7 members -14 yr term -one gov is “chairman” 2) Regional Fed Banks -boston -NYC -Philidelipa -Cleveland -Richmond -Chicago -St. Louis -Kansas City -Dallas -San Fransisco -Atlanta 3) Federal open market committee (FOMC) -Board of Governors -NYC Fed President -Four other presidents -Last 3 chairman -Paul Volker(1979-1987) -Alan Greenspan (1987-2006) -Ben Bernanke (2007-) -how can fed influence economy 1) required reserve ratio -recall deposits reserves and loans -3% of deposits up to $50 Million -10% above that
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2)Discount Rate -interest rate, at which banks borrow from the FED 3)Open market operations (most important) -Fed owns govt bonds -when fed buys bonds money created -when fed sells bonds money is removed from the system
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This note was uploaded on 12/12/2008 for the course ECON 29486 taught by Professor Denniswilson during the Fall '06 term at Western Kentucky University.

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10-8-07 - -Money is currency Deposits-when you deposit...

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