17 Monetary authorities and monetary policy

17 Monetary authorities and monetary policy - Monetary...

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Unformatted text preview: Monetary Authorities Monetary and Monetary Policy and Professor Henriques ECON 2000 A & E Monetary Authorities Are responsible for the creation and destruction of money Are responsible for conducting monetary policy Monetary policy should be conducted in a way that is conducive to promoting economic growth, prosperity, and price stability U.S. Federal Reserve – policy tools Discount rate Federal funds rate Fractional reserve banking The importance of fractional reserve banking Open market operations Buying and selling bonds Banks buying bonds from the Federal reserve decreases the money supply Banks selling bonds from the Federal reserve increases the money supply Bank of Canada – key concepts http://www.bankofcanada.ca/en/ Roles of the Bank of Canada http://www.bankofcanada.ca/en/faq/faq_ba nk_roles.html Bank of Canada – key concepts Target for the overnight rate, operating band, bank rate Monetary policy http://www.bankofcanada.ca/en/faq/faq_ba nk_monetary.html ...
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