2. Objectives of Part IV
Part IV explores the conduct of monetary
policy by the Federal Reserve System and its
operational framework.
โข Present a balance sheet of Federal Reserve
โข Explain three tools of monetary policy
โข Understand the multiple deposit creation
process as an integral part of conducting
monetary policy
โข Present the tools-targets-goals framework
of conducting monetary policy and
difficulties faced by the Federal Reserve to
achieve its goals
3. Outline of Part IV
โข Central Bank (Unit 21)
โข Multiple Deposit Creation & Money Supply
(Unit 22)
โข Conduct of Monetary Policy (Unit 23)
4. Analytical Framework in Part IV
Building blocks of conduct of monetary policy
โข Balance sheet of Federal Reserve
โข Monetary policy tools of the Federal
Reserve: open market operation, discount
window operation, and reserve requirement
โข Multiple deposit creation process
โข Tools-Targets-Goals framework of
conducting monetary policy