{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 17 - Chapter 17-The Money Supply Process Players in...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 17-The Money Supply Process Players in the Money Supply Process •Central bank (Federal Reserve System) •Banks (depository institutions; financial intermediaries) •Depositors (individuals and institutions) Fed’s Balance Sheet •Monetary Liabilities –Currency in circulation: in the hands of the public –Reserves: bank deposits at the Fed and vault cash •Assets –Government securities: holdings by the Fed that affect money supply and earn interest –Discount loans: provide reserves to banks and earn the discount rate Open Market Purchase from a Bank •Net result is that reserves have increased by $100 •No change in currency •Monetary base has risen by $100 Open Market Purchase from Nonbank Public I •Person selling bonds to the Fed deposits the Fed’s check in the bank •Identical result as the purchase from a bank Open Market Purchase from Nonbank Public II •The person selling the bonds cashes the Fed’s check •Reserves are unchanged
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}