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Macro 14
- 12. Chapter 15 The Federal Reserve System
- 13. Chapter 15 Central Banks Money Supplies Fractional Reserve Banking Reserve Ratio - Money Multiplier Monetary Tools Systemic Risks Control AD-AS Model
- 15. Who is the chairman of the central bank in your country?
- 16. AD Real GDP Growth Rate In๏ฌation Rate ฯ LRAS SRAS Recession In๏ฌation
- 17. Negative Positive Shift Left Shift Right Aggregate Supply Curve Bad weather Good weather Higher oil price Lower Oil Price Tech slump Tech boom Higher business taxes or regulations Lower business taxes or regulation War, Earthquake, Pandemic Smooth production Aggregate Demand Curve Slower Money Supply Growth Faster money Supply Growth Fear Con๏ฌdence Reduced Wealth Increased Wealth Higher Personal Taxes Lower Personal Taxes Lower Government Spending Higher Government Spending Decreased Export Growth Increased Export Growth Increased Import Growth Decreased Import Growth
- 18. Negative Positive Shift Left Shift Right Aggregate Supply Curve Bad weather Good weather Higher oil price Lower Oil Price Tech slump Tech boom Higher business taxes or regulations Lower business taxes or regulation War, Earthquake, Pandemic Smooth production Aggregate Demand Curve Slower Money Supply Growth Faster money Supply Growth Fear Con๏ฌdence Reduced Wealth Increased Wealth Higher Personal Taxes Lower Personal Taxes Lower Government Spending Higher Government Spending Decreased Export Growth Increased Export Growth Increased Import Growth Decreased Import Growth
- 19. Federal Reserve Bank - FED Money Supply U.S. Treasury Banks Payment System
- 20. Money Supply Measuring Currency Checking Accounts Savings Accounts Reserves at FED Money Market Accounts Short -Term Accounts
- 22. Reserve Ratio Fractional Reserve Banking Money Multiplier
- 23. Reserve Ratio Fraction of deposits that must be held in reserve
- 24. Money Multiplies as it is spent and re-spent and re- spent again and againโฆ RR = 1รท MM Money Multiplier
- 25. Reserve Ratio RR = 1รท MM Money Multiplier MM = 1รท RR
- 26. Reserve Ratio Money Multipler 100% 1 50% 2 20% 5 10% 10 5% 20 1% 100
- 27. Discount Rate Rate the FED charges member banks
- 28. Discount Rate Currently 2.25% Average 4.45% (1950 - 2017)
- 29. Discount Rate In๏ฌuences other rates
- 30. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Time to Maturity Interest Rate FED Changes Discount Rate Other Rates Follow
- 31. Pattern?
- 32. Open Market Operations Buying and Selling Bonds
- 33. Tools Open Market Operations Discount Rate Reserve Ratio
- 34. Open Market Operations Buying and Selling Financial Instruments
- 35. Banks now have more cash to loan Central Bank Public Banks Increase Money Supply? Buy bonds for cash
- 36. Banks now have less cash to loan Central Bank Public Banks Decrease Money Supply? Sell bonds for cash
- 37. Central Banks Independent Political Pressure Accountable Who do they answer to?