Chapter 14 Notes

Chapter 14 Notes - 22:06...

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22:06 Chapter 14 – Monetary Policy and the Federal Reserve     A) Look at how the nation’s money supply is determined B) Explore the question: How should the central bank conduct monetary policy? The supply and demand for money – discussed how the economists use the term  “money” in chapter 7 Talk more about how monetary policy affects prices and interest rates in the long- run Defined quantity of money as number of dollars held by the public, and we  assumed that the Federal Reserve  controls the supply of money by increasing or  decreasing the number of dollars in circulation through open market operation. The money supply is determined not only by Federal Reserve policy but also by  the behavior of households (which hold money) and banks (in which money is  held) M = Money Supply, CU = Currency, DEP = Demand Deposits:
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This note was uploaded on 02/06/2011 for the course BUAD 252x at USC.

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Chapter 14 Notes - 22:06...

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