Lesson+13--Money+Supply+Process

Lesson 13-Money Sup - Lesson 13 Money Supply Process M&B Chapters 16 Modern Money Mechanics Federal Reserve Bank of Chicago 1994—out of print

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Unformatted text preview: Lesson 13: Money Supply Process M&B Chapters 16 Modern Money Mechanics, Federal Reserve Bank of Chicago, 1994—out of print, but available here: http://www.bibliotecapleyades.net/archivos_pdf/money_mechanics.pdf Agents in the Money Supply Process • Federal Reserve System • Banks (depository institutions; financial intermediaries) • Depositors (individuals and institutions) • Borrowers (individuals and institutions) Simplified Federal Reserve Balance Sheet Fe de ra l Re se rve a sse t s lia b ilt ie s Securities Bank Reserves (system open market account, SOM A) Currency in Circulation Discount Window Loans Other Liabilit ies & Capital Ot her Assets Monetary Base: Sometimes Called “High-Powered Money” Monetary Base = Reserves + Currency Changing Composition of the Monetary Base Composition of Monetary Base 2 0 0 0 0 0 4 0 0 0 0 0 6 0 0 0 0 0 8 0 0 0 0 0 10 0 0 0 0 0 12 0 0 0 0 0 14 0 0 0 0 0 16 0 0 0 0 0 18 0 0 0 0 0 2 0 0 0 0 0 0 Bank Reserves Currency Fed Sells Securities To Merrill Lynch Decreasing Bank Reserves Federal Reserve Merrill Lynch asset s liabilt ies asset s liabilt ies + $1 bln Securities- $1 bln Securities- $1 bln Reserves- $1 bln Deposit Citibank asset s liabilt ies- $1 bln Reserves- $1 bln Merrill Deposit Fed Buys Securities From Merrill Lynch Increasing Bank Reserves Federal Reserve Merrill Lynch asset s liabilt ies asset s liabilt ies- $1 bln Securities + $1 bln Securities + $1 bln Reserves + $1 bln Deposit Citibank asset s liabilt ies + $1 bln Reserves + $1 bln Merrill Deposit Open Market Operations: Summary...
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This note was uploaded on 02/15/2012 for the course ECONOMICS 220:301 taught by Professor Sheflin during the Fall '09 term at Rutgers.

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Lesson 13-Money Sup - Lesson 13 Money Supply Process M&B Chapters 16 Modern Money Mechanics Federal Reserve Bank of Chicago 1994—out of print

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