Intro Macro N. Sheflin ASSIGNMENT 6 NOTES:We introduce Money, Banking and the Federal Reserve. You should be able to answer the following: Lots here, interesting, simple, important. You are responsible for only the SIMPLEST of t-accounts What’s money and why is it good (for the economy?) How is money created and controlled? How do banks ‘work’ and what do banks have to do with money? What’s leverage? Net worth? What’s the Fed? What determines interest rates? What’s the role of the financial system in the broader economy? Also, sum of infinite geometrically declining series pops up here (as it did in the expenditure multiplier) – see notes below. Investment Game– review of round 1 – buy something, read investopedia, get rich. READING Parkin Chapter 9 (Money, the Price level and Inflation). SKIPthe section on the Quantity Theory of Money for now. Also, the Wikipedia entry is good on the history of money: http://en.wikipedia.org/wiki/History_of_moneyShort, simple article on capital and leverage in banking at: www.mercatus.org/PDFDownload.aspx?contentID=26042Additional background at: •Brief History and Background at http://minneapolisfed.org/econed/curric/history.cfm•Some Money Facts from PBS at http://www.pbs.org/moneymoves/money_facts/•U.S. Money History at http://www.frbsf.org/publications/federalreserve/annual/1995/history.html•The face of money – what’s on a bill at http://minneapolisfed.org/econed/curric/pictures.cfmMore, if you have the stamina •The Federal Reserve Board of Governors Web Site http://www.federalreserve.gov/•Look at the American Currency Exhibit (Take the Tour) http://www.sf.frb.org/currency/index.html•Some interesting pictures of early money at http://www.thebritishmuseum.ac.uk/worldofmoney/world_what.html•Fedpoints have great short introductions to various monetary policy topics. Look here: http://www.newyorkfed.org/aboutthefed/fedpoints.htmland look at Who We Are and What We DoBoard of Governors of the Federal Reserve SystemFederal Open Market CommitteeCurrency Processing and DestructionHow Currency Gets into CirculationFederal Funds Rate And anything else that looks interesting Key points and Summary– read carefully before and after the homework.
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