Unformatted text preview: -making loans to banks 13: Our decisions with $ affect bank reserves, not monetary base 18: R/D- how much of deposits banks actually keep in reserve-How does it work? Withdrawals and deposits are offsetting (roughly =) 22: Every time bank makes loan, money supply increases 23: Shows how process works -(Increase MS, base stays the same)—not an infinite process 24: Know these formulas! 26: m=money multiplier 27: Money supply determined by Fed monetary base, how much currency we choose to hold and how much banks hold 28: Fed uses control over money reserve to control the economy 29: Multiplier used to be MUCH bigger KNOW GREAT DEPRESSION SLIDES!!...
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- Spring '08
- Monetary Policy, Federal Reserve System, Fed, monetary base, Fed monetary base