MSCLASS - Money Supply Fed Balance Sheet and Sources and...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Money Supply • Fed Balance Sheet and Sources and Uses of Reserves •Deposit Creation and Simple Deposit Multiplier •Monetary Base Multiplier model M=m x MB •Factors determining the multiplier Role of public fed banks 1 •Role of public, fed, banks •Determinants of c, e and r •The reserves market •New items on the balance sheet and new tools of the fed Key Points ± The Fed targets the Fed Funds rate and can ‘force’ the market rate to its desired target ± It does this by controlling bank reserves thru open market operations and rates it pays and charges for holding/borrowing reserves ± Fed funds rate impacts other short-term rates and ultimately long-term rates as well 2 ± Reserve changes generally change Ms ± Roughly, Reserves=Fed Assets-Fed Liabilities(-Reserves) ² So assets and liabilities explain reserves ± Ms used to be focus of Fed policy ± Monetary Base Multiplier model M=m x B ² Factors determining the multiplier ² Role of public, fed, banks In the News? ± 3
Background image of page 1

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

View Full DocumentRight Arrow Icon
2 Course Issues ± Clicker Registration – if not, must see me ± Gradebook/ emails ± Online Midterm ² One Hour Window – starting Tuesday 10/19 6pm thru Thursday 10/21 6pm. ² Covers weeks 1-7 ² Study big qs, hw, slides 4 ± Investment Game 1 ± How to study/learn/grow wealthy ± How to get help ± Math & Actuarial Career Day 10/8 ± Business & Liberal Arts Career Day10/15 ± SAS Majors Fair 10/20 ± ODE Friday How is money ‘created’? • Fed Open Market Purchase of ‘used’ Bond from Dealer for $100 (dealer no wealthier) • Dealer Deposits $100 in Bank (M1 up by $100) • Bank holds $10 in reserves, loans out $90 • $90 deposited in other Bank (M1 up by additional $90) 5 • Bank holds $9 as required reserves, loans out $81 etc
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 8

MSCLASS - Money Supply Fed Balance Sheet and Sources and...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online