The document discusses the monetary system and the role of money. It describes money as having three main functions: as a medium of exchange, a unit of account, and a store of value. It then discusses the US monetary system, the role of the Federal Reserve in regulating banks and money supply through open market operations and setting reserve requirements. Banks can expand the money supply through fractional-reserve banking and the money multiplier formula is used to calculate total money creation.
Saving, Investment, and the Financial SystemTuul Tuul
The document discusses the financial system and how it relates to saving, investment, and the allocation of resources in the economy. It describes how financial institutions like banks and markets help match savers with borrowers. It explains different types of financial institutions and markets, including stocks, bonds, banks, and mutual funds. It also discusses how government policies around taxes and spending can influence saving and investment in the economy.
The document discusses concepts related to open economies, including exports, imports, net exports, exchange rates, and purchasing power parity. It defines key terms like open vs. closed economies, nominal vs. real exchange rates, and how exchange rates are determined by purchasing power parity theory. It also examines how exchange rates and other factors influence trade balances and net exports.
The Influence of Monetary and Fiscal Policy on Aggregate DemandTuul Tuul
1. The document discusses how monetary and fiscal policy can influence aggregate demand in the short run through three main transmission mechanisms: interest rates, wealth effects, and exchange rates (for monetary policy) and changes in government spending and taxes (for fiscal policy).
2. It explains Keynes' theory of liquidity preference which holds that the interest rate adjusts to balance the supply and demand for money in the money market. Monetary policy shifts the money supply curve and thereby affects interest rates and aggregate demand.
3. Fiscal policy, like changes in government purchases, can shift aggregate demand directly but its multiplier effect on output may be partly offset by higher interest rates crowding out private investment.
Chap 23, Measuring a Nation’s Income.pptmusanif shah
The document discusses key concepts in macroeconomics including:
- Gross Domestic Product (GDP) measures the total income and expenditures in an economy in a given period.
- GDP is divided into consumption, investment, government purchases, and net exports.
- Nominal GDP uses current prices while real GDP uses constant prices to measure production adjusted for inflation.
- While GDP is a good measure of economic well-being, it does not capture all aspects of quality of life.
The document discusses key concepts in macroeconomics including gross domestic product (GDP), the measurement of GDP, and its components. GDP is the total market value of all final goods and services produced within a country in a given period of time. It represents the total income and total expenditures in the economy. GDP is comprised of consumption, investment, government purchases, and net exports. The document also discusses real GDP, nominal GDP, and the GDP deflator for adjusting for inflation.
This document summarizes key concepts related to money, interest rates, and exchange rates. It discusses what money is, how the money supply is controlled by central banks, and factors that influence the demand for money, including interest rates, prices, and income. A model of aggregate money demand is presented showing the relationship between real money demand, interest rates, and income. The interaction of money supply and demand in the money market is explained, along with how changes in the money supply or national income affect interest rates. Finally, the connection between the domestic money market and foreign exchange market is described.
This document discusses the monetary system and the role of money and central banking. It explains that the Federal Reserve regulates the US monetary system and controls the money supply through tools like open market operations, reserve requirements, and interest rates. Commercial banks also influence the money supply through fractional-reserve banking, where they hold a portion of deposits as reserves and lend out the rest, expanding the overall money supply through the money multiplier effect.
The document discusses the costs of taxation. It explains that taxes reduce economic efficiency by creating a wedge between the price paid by buyers and received by sellers. This leads to a reduction in quantity traded from the efficient level. The difference between the total benefits and costs without the tax, compared to with the tax, is called the deadweight loss. The size of the deadweight loss depends on how responsive supply and demand are to price changes - the more responsive they are, the greater the efficiency reduction from the tax. While tax revenue increases with moderate tax rates, very high taxes can reduce market size and quantity traded so much that they ultimately lower tax revenues too.
Saving, Investment, and the Financial SystemTuul Tuul
The document discusses the financial system and how it relates to saving, investment, and the allocation of resources in the economy. It describes how financial institutions like banks and markets help match savers with borrowers. It explains different types of financial institutions and markets, including stocks, bonds, banks, and mutual funds. It also discusses how government policies around taxes and spending can influence saving and investment in the economy.
The document discusses concepts related to open economies, including exports, imports, net exports, exchange rates, and purchasing power parity. It defines key terms like open vs. closed economies, nominal vs. real exchange rates, and how exchange rates are determined by purchasing power parity theory. It also examines how exchange rates and other factors influence trade balances and net exports.
The Influence of Monetary and Fiscal Policy on Aggregate DemandTuul Tuul
1. The document discusses how monetary and fiscal policy can influence aggregate demand in the short run through three main transmission mechanisms: interest rates, wealth effects, and exchange rates (for monetary policy) and changes in government spending and taxes (for fiscal policy).
2. It explains Keynes' theory of liquidity preference which holds that the interest rate adjusts to balance the supply and demand for money in the money market. Monetary policy shifts the money supply curve and thereby affects interest rates and aggregate demand.
3. Fiscal policy, like changes in government purchases, can shift aggregate demand directly but its multiplier effect on output may be partly offset by higher interest rates crowding out private investment.
Chap 23, Measuring a Nation’s Income.pptmusanif shah
The document discusses key concepts in macroeconomics including:
- Gross Domestic Product (GDP) measures the total income and expenditures in an economy in a given period.
- GDP is divided into consumption, investment, government purchases, and net exports.
- Nominal GDP uses current prices while real GDP uses constant prices to measure production adjusted for inflation.
- While GDP is a good measure of economic well-being, it does not capture all aspects of quality of life.
The document discusses key concepts in macroeconomics including gross domestic product (GDP), the measurement of GDP, and its components. GDP is the total market value of all final goods and services produced within a country in a given period of time. It represents the total income and total expenditures in the economy. GDP is comprised of consumption, investment, government purchases, and net exports. The document also discusses real GDP, nominal GDP, and the GDP deflator for adjusting for inflation.
This document summarizes key concepts related to money, interest rates, and exchange rates. It discusses what money is, how the money supply is controlled by central banks, and factors that influence the demand for money, including interest rates, prices, and income. A model of aggregate money demand is presented showing the relationship between real money demand, interest rates, and income. The interaction of money supply and demand in the money market is explained, along with how changes in the money supply or national income affect interest rates. Finally, the connection between the domestic money market and foreign exchange market is described.
This document discusses the monetary system and the role of money and central banking. It explains that the Federal Reserve regulates the US monetary system and controls the money supply through tools like open market operations, reserve requirements, and interest rates. Commercial banks also influence the money supply through fractional-reserve banking, where they hold a portion of deposits as reserves and lend out the rest, expanding the overall money supply through the money multiplier effect.
The document discusses the costs of taxation. It explains that taxes reduce economic efficiency by creating a wedge between the price paid by buyers and received by sellers. This leads to a reduction in quantity traded from the efficient level. The difference between the total benefits and costs without the tax, compared to with the tax, is called the deadweight loss. The size of the deadweight loss depends on how responsive supply and demand are to price changes - the more responsive they are, the greater the efficiency reduction from the tax. While tax revenue increases with moderate tax rates, very high taxes can reduce market size and quantity traded so much that they ultimately lower tax revenues too.
Inflation is a rise in the general level of prices over time which decreases the purchasing power of a currency. It is measured using indices like the Wholesale Price Index (WPI), Consumer Price Index (CPI), and GDP deflator. There are two main types of inflation - demand-pull inflation caused by increased aggregate demand, and cost-push inflation caused by increased production costs. Governments use monetary policy like changing interest rates, fiscal policy like altering taxation and expenditures, and price controls to combat inflation.
The document discusses the design of the U.S. tax system. It describes how the federal government collects about two-thirds of taxes, mainly from individual income tax and payroll taxes. State and local governments collect the remaining taxes, primarily from sales and property taxes. The goals of the tax system are efficiency by minimizing costs, and equity by fairly distributing the tax burden according to ability to pay.
The document discusses the classical theory of inflation. It defines inflation as a rise in the overall price level and explains that according to the quantity theory of money, inflation is primarily caused by growth in the money supply. When the money supply increases, it causes the price level to rise proportionately unless output or velocity rises as well. The document also outlines some costs of inflation like shoeleather costs, menu costs, and tax distortions.
A Macroeconomic Theory of the Open EconomyChris Thomas
This document discusses macroeconomic models of open economies. It covers key variables like net exports and exchange rates. It describes the markets for loanable funds and foreign currency exchange. The supply of and demand for loanable funds depends on the interest rate and determines investment levels. The foreign exchange market balances supply of dollars for net capital outflows with demand for dollars for net exports. Government deficits reduce loanable funds and increase interest rates, lowering investment and currency value. Trade policies like tariffs impact trade levels but not overall balances due to exchange rate adjustments. Political instability can trigger capital flight, raising rates and depreciating currencies.
This document discusses different types of unemployment. It describes the natural rate of unemployment as unemployment that exists even during economic booms due to frictional unemployment from job searching. Cyclical unemployment refers to unemployment that fluctuates with the business cycle. The document also discusses how the Bureau of Labor Statistics measures the unemployment rate by surveying households and categorizing individuals as employed, unemployed, or not in the labor force.
The document discusses factors that influence economic growth and standards of living. It explains that productivity depends on physical capital, human capital, natural resources, and technology. A country's ability to produce goods and services determines its standard of living. While higher saving can increase growth in the short-run, diminishing returns will eventually cause growth to slow down. Government policies can impact growth by influencing these productivity factors.
The document discusses different types of unemployment:
1) Natural rate of unemployment refers to unemployment that exists even during economic booms due to frictional and structural factors.
2) Cyclical unemployment fluctuates with the business cycle and refers to unemployment during recessions.
3) Frictional unemployment results from the time it takes for workers to find suitable jobs as worker and job characteristics change.
4) Structural unemployment occurs when there are insufficient jobs in certain sectors for all who want to work, such as due to minimum wages, unions, or efficiency wages above market levels.
The balance of payments records all economic transactions between a country and the rest of the world over a period of time. It includes visible items like exports and imports of goods, as well as invisible items like services. It also includes capital transfers. The balance of payments aims to systematically record all these international transactions and ensure receipts and payments are balanced. A country may experience a surplus or deficit in its balance of payments depending on whether receipts from transactions exceed payments or vice versa. Disequilibria can be corrected through various monetary and non-monetary measures that target exchange rates, exports, imports and capital flows.
This document discusses factors that influence economic growth and standards of living. It states that productivity, determined by physical capital, human capital, natural resources and technology, is the key driver of living standards. While living standards vary widely globally, annual growth rates seem small but compound significantly over decades. Government policies like encouraging investment, education, political stability, free trade and research can boost productivity and long-term growth, though investment is subject to diminishing returns.
This document discusses international trade and the effects of free trade versus trade restrictions. It begins by examining the determinants of trade, explaining that a country will export goods where it has a comparative advantage over other countries as indicated by a domestic price below the world price. For goods where a country lacks comparative advantage and the domestic price is above world levels, the country will import. Free trade increases overall welfare by allowing for gains from trade, though some domestic producers may lose. The document then analyzes the effects of trade restrictions like tariffs and quotas, finding they reduce imports, benefit domestic producers but harm consumers, and create deadweight losses that lower total welfare.
The document discusses key concepts in finance including present value, time value of money, risk and risk management, and asset valuation. It explains that present value calculates the current amount needed to generate a future sum given an interest rate. It also describes how risk-averse individuals can reduce risk through insurance, diversification, or accepting lower returns. Finally, it summarizes the efficient market hypothesis that asset prices reflect all available information.
The document discusses the monetary system and the role of money. It describes how money serves as a medium of exchange, unit of account, and store of value. It also explains how the Federal Reserve regulates the US monetary system by controlling the money supply through open market operations and adjusting reserve requirements or the discount rate. Additionally, it covers how fractional-reserve banking allows banks to multiply the money supply through lending deposits.
The document discusses monetary policy and inflation. It explains that the overall price level in an economy is determined by the balance between the money supply and demand. When the central bank increases the money supply, it causes inflation as measured by a rising price level. Persistent growth in the money supply leads to ongoing inflation. The quantity theory of money holds that inflation is primarily caused by increases in the money supply. When governments print too much money to fund spending, it can result in hyperinflation and an "inflation tax" imposed on holders of money.
Ten Principles of Economics - Micro & Macro EconomicsFaHaD .H. NooR
Ten Principles of Economics
Principle #1: People Face Trade-offs.
Principle #2: The Cost of Something Is What You Give Up to Get It.
Principle #3: Rational People Think at the Margin.
Principle #4: People Respond to Incentives.
Principle #5: Trade Can Make Everyone Better Off.
Principle #6: Markets Are Usually a Good Way to Organize Economic Activity.
Principle #7: Governments Can Sometimes Improve Market Outcomes.
Principle #8: The Standard of Living Depends on a Country’s Production.
Principle #9: Prices Rise When the Government Prints Too Much Money.
Principle #10: Society Faces a Short-run Trade-off Between Inflation and Unemployment.
This document summarizes key concepts about exchange rates and the foreign exchange market from an asset approach perspective. It discusses how exchange rates are determined by supply and demand in the foreign exchange market, and how interest rates, expectations of future exchange rates, and relative prices affect equilibrium in the market. Equilibrium requires interest rate parity, where expected returns are equal across currency deposits when measured in the same currency. A rise in a currency's interest rate causes its appreciation, while a rise in expected future exchange rates causes the current rate to rise as well.
This document summarizes key concepts about labor markets from an economics textbook. It discusses factors of production and how the demand for labor is derived from the demand for output. It then explains how firms determine the optimal quantity of labor to hire by equating the marginal product of labor to the wage according to the principle of profit maximization. Labor supply and demand determine the equilibrium wage in competitive markets. The document also briefly discusses land, capital, and productivity.
The document discusses how the Consumer Price Index (CPI) is used to measure inflation and cost of living changes over time. The CPI tracks the prices of goods and services in a fixed market basket. It has limitations like substitution bias and fails to account for new products. While imperfect, the CPI provides a general measure of inflation, which economists use to adjust dollar figures and calculate real interest rates after removing inflation effects.
The financial system consists of institutions that match savers and investors. It includes financial markets like the stock and bond markets, where savers can directly provide funds to borrowers, as well as financial intermediaries like banks and mutual funds, where savers can indirectly provide funds. Government policies around taxes, spending, and deficits can impact saving, investment, and interest rates in the market for loanable funds by shifting the supply of or demand for funds.
This document is a PowerPoint presentation summarizing the 10 principles of economics according to the textbook "Principles of Economics" by N. Gregory Mankiw. It discusses key economic concepts like scarcity, tradeoffs, costs and benefits, incentives, markets, market failures, productivity, inflation, and the relationship between inflation and unemployment.
Open-Economy Macroeconomics: Basic ConceptsChris Thomas
This document provides an overview of key concepts in open-economy macroeconomics. It defines open and closed economies, and describes how an open economy interacts through international trade and financial flows. It explains exports, imports, the trade balance, and factors that influence them. It also discusses net capital flows, interest rates, and the relationship between saving, investment, and international flows. Finally, it introduces nominal and real exchange rates, and the theory of purchasing power parity.
The document discusses money and the monetary system. It defines money and its key functions as a medium of exchange, unit of account, and store of value. It describes the Federal Reserve as the central bank that regulates the US monetary system and controls the money supply through tools like open market operations, reserve requirements, and interest rates. When banks make loans from their deposits, this increases the money supply through fractional-reserve banking and the money multiplier effect. However, the Fed's control over the money supply is imperfect as it cannot directly control lending or deposit amounts.
This document provides an overview of currency and the monetary system in the United States. It discusses the functions and characteristics of money, the development of the banking system and currency over time, and the creation of the Federal Reserve System in 1914 to serve as the central bank and oversee monetary policy. Key topics covered include the gold standard, the money multiplier effect of fractional-reserve banking, and the Federal Reserve's tools of conducting open market operations and setting reserve requirements and interest rates to influence the money supply.
Inflation is a rise in the general level of prices over time which decreases the purchasing power of a currency. It is measured using indices like the Wholesale Price Index (WPI), Consumer Price Index (CPI), and GDP deflator. There are two main types of inflation - demand-pull inflation caused by increased aggregate demand, and cost-push inflation caused by increased production costs. Governments use monetary policy like changing interest rates, fiscal policy like altering taxation and expenditures, and price controls to combat inflation.
The document discusses the design of the U.S. tax system. It describes how the federal government collects about two-thirds of taxes, mainly from individual income tax and payroll taxes. State and local governments collect the remaining taxes, primarily from sales and property taxes. The goals of the tax system are efficiency by minimizing costs, and equity by fairly distributing the tax burden according to ability to pay.
The document discusses the classical theory of inflation. It defines inflation as a rise in the overall price level and explains that according to the quantity theory of money, inflation is primarily caused by growth in the money supply. When the money supply increases, it causes the price level to rise proportionately unless output or velocity rises as well. The document also outlines some costs of inflation like shoeleather costs, menu costs, and tax distortions.
A Macroeconomic Theory of the Open EconomyChris Thomas
This document discusses macroeconomic models of open economies. It covers key variables like net exports and exchange rates. It describes the markets for loanable funds and foreign currency exchange. The supply of and demand for loanable funds depends on the interest rate and determines investment levels. The foreign exchange market balances supply of dollars for net capital outflows with demand for dollars for net exports. Government deficits reduce loanable funds and increase interest rates, lowering investment and currency value. Trade policies like tariffs impact trade levels but not overall balances due to exchange rate adjustments. Political instability can trigger capital flight, raising rates and depreciating currencies.
This document discusses different types of unemployment. It describes the natural rate of unemployment as unemployment that exists even during economic booms due to frictional unemployment from job searching. Cyclical unemployment refers to unemployment that fluctuates with the business cycle. The document also discusses how the Bureau of Labor Statistics measures the unemployment rate by surveying households and categorizing individuals as employed, unemployed, or not in the labor force.
The document discusses factors that influence economic growth and standards of living. It explains that productivity depends on physical capital, human capital, natural resources, and technology. A country's ability to produce goods and services determines its standard of living. While higher saving can increase growth in the short-run, diminishing returns will eventually cause growth to slow down. Government policies can impact growth by influencing these productivity factors.
The document discusses different types of unemployment:
1) Natural rate of unemployment refers to unemployment that exists even during economic booms due to frictional and structural factors.
2) Cyclical unemployment fluctuates with the business cycle and refers to unemployment during recessions.
3) Frictional unemployment results from the time it takes for workers to find suitable jobs as worker and job characteristics change.
4) Structural unemployment occurs when there are insufficient jobs in certain sectors for all who want to work, such as due to minimum wages, unions, or efficiency wages above market levels.
The balance of payments records all economic transactions between a country and the rest of the world over a period of time. It includes visible items like exports and imports of goods, as well as invisible items like services. It also includes capital transfers. The balance of payments aims to systematically record all these international transactions and ensure receipts and payments are balanced. A country may experience a surplus or deficit in its balance of payments depending on whether receipts from transactions exceed payments or vice versa. Disequilibria can be corrected through various monetary and non-monetary measures that target exchange rates, exports, imports and capital flows.
This document discusses factors that influence economic growth and standards of living. It states that productivity, determined by physical capital, human capital, natural resources and technology, is the key driver of living standards. While living standards vary widely globally, annual growth rates seem small but compound significantly over decades. Government policies like encouraging investment, education, political stability, free trade and research can boost productivity and long-term growth, though investment is subject to diminishing returns.
This document discusses international trade and the effects of free trade versus trade restrictions. It begins by examining the determinants of trade, explaining that a country will export goods where it has a comparative advantage over other countries as indicated by a domestic price below the world price. For goods where a country lacks comparative advantage and the domestic price is above world levels, the country will import. Free trade increases overall welfare by allowing for gains from trade, though some domestic producers may lose. The document then analyzes the effects of trade restrictions like tariffs and quotas, finding they reduce imports, benefit domestic producers but harm consumers, and create deadweight losses that lower total welfare.
The document discusses key concepts in finance including present value, time value of money, risk and risk management, and asset valuation. It explains that present value calculates the current amount needed to generate a future sum given an interest rate. It also describes how risk-averse individuals can reduce risk through insurance, diversification, or accepting lower returns. Finally, it summarizes the efficient market hypothesis that asset prices reflect all available information.
The document discusses the monetary system and the role of money. It describes how money serves as a medium of exchange, unit of account, and store of value. It also explains how the Federal Reserve regulates the US monetary system by controlling the money supply through open market operations and adjusting reserve requirements or the discount rate. Additionally, it covers how fractional-reserve banking allows banks to multiply the money supply through lending deposits.
The document discusses monetary policy and inflation. It explains that the overall price level in an economy is determined by the balance between the money supply and demand. When the central bank increases the money supply, it causes inflation as measured by a rising price level. Persistent growth in the money supply leads to ongoing inflation. The quantity theory of money holds that inflation is primarily caused by increases in the money supply. When governments print too much money to fund spending, it can result in hyperinflation and an "inflation tax" imposed on holders of money.
Ten Principles of Economics - Micro & Macro EconomicsFaHaD .H. NooR
Ten Principles of Economics
Principle #1: People Face Trade-offs.
Principle #2: The Cost of Something Is What You Give Up to Get It.
Principle #3: Rational People Think at the Margin.
Principle #4: People Respond to Incentives.
Principle #5: Trade Can Make Everyone Better Off.
Principle #6: Markets Are Usually a Good Way to Organize Economic Activity.
Principle #7: Governments Can Sometimes Improve Market Outcomes.
Principle #8: The Standard of Living Depends on a Country’s Production.
Principle #9: Prices Rise When the Government Prints Too Much Money.
Principle #10: Society Faces a Short-run Trade-off Between Inflation and Unemployment.
This document summarizes key concepts about exchange rates and the foreign exchange market from an asset approach perspective. It discusses how exchange rates are determined by supply and demand in the foreign exchange market, and how interest rates, expectations of future exchange rates, and relative prices affect equilibrium in the market. Equilibrium requires interest rate parity, where expected returns are equal across currency deposits when measured in the same currency. A rise in a currency's interest rate causes its appreciation, while a rise in expected future exchange rates causes the current rate to rise as well.
This document summarizes key concepts about labor markets from an economics textbook. It discusses factors of production and how the demand for labor is derived from the demand for output. It then explains how firms determine the optimal quantity of labor to hire by equating the marginal product of labor to the wage according to the principle of profit maximization. Labor supply and demand determine the equilibrium wage in competitive markets. The document also briefly discusses land, capital, and productivity.
The document discusses how the Consumer Price Index (CPI) is used to measure inflation and cost of living changes over time. The CPI tracks the prices of goods and services in a fixed market basket. It has limitations like substitution bias and fails to account for new products. While imperfect, the CPI provides a general measure of inflation, which economists use to adjust dollar figures and calculate real interest rates after removing inflation effects.
The financial system consists of institutions that match savers and investors. It includes financial markets like the stock and bond markets, where savers can directly provide funds to borrowers, as well as financial intermediaries like banks and mutual funds, where savers can indirectly provide funds. Government policies around taxes, spending, and deficits can impact saving, investment, and interest rates in the market for loanable funds by shifting the supply of or demand for funds.
This document is a PowerPoint presentation summarizing the 10 principles of economics according to the textbook "Principles of Economics" by N. Gregory Mankiw. It discusses key economic concepts like scarcity, tradeoffs, costs and benefits, incentives, markets, market failures, productivity, inflation, and the relationship between inflation and unemployment.
Open-Economy Macroeconomics: Basic ConceptsChris Thomas
This document provides an overview of key concepts in open-economy macroeconomics. It defines open and closed economies, and describes how an open economy interacts through international trade and financial flows. It explains exports, imports, the trade balance, and factors that influence them. It also discusses net capital flows, interest rates, and the relationship between saving, investment, and international flows. Finally, it introduces nominal and real exchange rates, and the theory of purchasing power parity.
The document discusses money and the monetary system. It defines money and its key functions as a medium of exchange, unit of account, and store of value. It describes the Federal Reserve as the central bank that regulates the US monetary system and controls the money supply through tools like open market operations, reserve requirements, and interest rates. When banks make loans from their deposits, this increases the money supply through fractional-reserve banking and the money multiplier effect. However, the Fed's control over the money supply is imperfect as it cannot directly control lending or deposit amounts.
This document provides an overview of currency and the monetary system in the United States. It discusses the functions and characteristics of money, the development of the banking system and currency over time, and the creation of the Federal Reserve System in 1914 to serve as the central bank and oversee monetary policy. Key topics covered include the gold standard, the money multiplier effect of fractional-reserve banking, and the Federal Reserve's tools of conducting open market operations and setting reserve requirements and interest rates to influence the money supply.
The Federal Reserve System is the central bank of the United States. It was established in 1913 with the enactment of the Federal Reserve Act in response to a series of financial panics. The Federal Reserve System has a three-part structure - the Board of Governors, the Federal Open Market Committee, and the 12 Federal Reserve Banks. It uses various monetary policy tools like open market operations, the discount rate, and reserve requirements to regulate the supply of money and achieve its mandates of maximum employment, stable prices, and moderate long-term interest rates. Despite its efforts, the Federal Reserve faces ongoing scrutiny over its ability to stimulate economic recovery in the aftermath of the late 2000s recession.
The document discusses the functions and types of money, including how money serves as a medium of exchange, unit of account, and store of value. It describes the different components that make up the US money supply, such as currency, demand deposits, savings deposits, and money market funds. The document also provides an overview of the Federal Reserve System, including its structure with the Board of Governors and regional Federal Reserve Banks. It explains how the Federal Reserve uses open market operations, reserve requirements, and interest rates to influence the US money supply and achieve its monetary policy goals.
The document provides an overview of money, banking, and financial institutions. It discusses the functions of money as a medium of exchange, unit of account, and store of value. It describes the components of the money supply, including M1 and M2 aggregates. It also outlines the organizational structure of the Federal Reserve System, including the regional Federal Reserve banks, Board of Governors, and Federal Open Market Committee. Additionally, it discusses the Federal Reserve's functions and independence, and provides context on the financial crisis of 2007-2008.
This document discusses the monetary system and the role of money and central banking. It explains that the Federal Reserve regulates the US monetary system and controls the money supply through tools like open market operations, reserve requirements, and interest rates. Commercial banks also influence the money supply through fractional-reserve banking, where they hold a portion of deposits as reserves and lend out the rest, expanding the overall money supply through the money multiplier effect.
This document discusses the monetary system and the role of money and central banking. It explains that the Federal Reserve regulates the US monetary system and controls the money supply through tools like open market operations, reserve requirements, and interest rates. Commercial banks also influence the money supply through fractional-reserve banking, where they hold a portion of deposits as reserves and lend out the rest, expanding the overall money supply through the money multiplier effect.
The document discusses the monetary system and the role of money and central banking. It describes how money serves as a medium of exchange, unit of account, and store of value. It explains how the Federal Reserve regulates the US monetary system by controlling the money supply through tools like open market operations, reserve requirements, and interest rates. It also discusses how fractional-reserve banking allows banks to create money when they issue loans.
The Federal Reserve and Money SupplyTakes s.docxcherry686017
The Federal Reserve and Money Supply
*
Takes sections for chapters 10, 14, & 15 from the Mishkin text (9th edition), Federal Reserve reader, and www.federalreserve.gov
Chpt 10
3 key players
1. Depositors
2. Banks
3. Federal Reserve
Depositors are the most important providers of funds and they are the biggest users of fundsIf depositors lose confidence bank runs can occur, causing banks to lose their sources of funds If depositors have confidence banks have an increase amount of funds
Banks are the keepers of depositors funds
As before our deposits are their biggest liabilities, but their greatest assets
Balance Sheet is the most important document to understand the banking system
It is made up of two broad categories
Liabilities (Sources of Funds)
Assets (Uses of Funds)
Listed from most liquid to least liquid
Liabilities are simply the sources of funds
Checkable deposits
Payable on demand
Considered to be an asset for depositor (us)
Lowest cost of sources for banks we want easy access to liquidity
Only 6% of total liabilities (per the Fed)
Nontransaction deposits
CDs
Owners cannot write checks against such accounts
Primary source of bank funds (53% of bank liabilities)
Checkable deposits intterest paid on deposits has accounted for 25% of total bank operating expenses while the costs involved in servicing accounts (employee salaries, building, rent) has roughly 50% of operating expenses!
Liabilities Cont.
Discount Loans / Fed Fund (31% of liabilities)
Discount loans are loans from the Federal Reserve (also known as advances)
Typically 1%-pt above the fed funds rate
Banks typically do not want to borrow from the Fed unless absolutely necessary!
Fed Funds loan (overnight loans)
Federal funds are overnight borrowings by banks to maintain their bank reserves at the Federal Reserve
Transactions in the federal funds market allow banks with excess reserve balances to lend reserves to banks with deficient reserves
These loans are usually made for one day only (‘overnight’).
Bank Capital (10% of liabilities)
Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions.
Typically referred to as the uses of fundsThe interest payments earned on them are what enable banks to make profits.
Reserve Requirements
These are deposits plus currency that is physically held by banks.
Reserves are made up by required reserves and excess reserves
Required Reserves: For every dollar of checkable deposits at a bank (a fraction must be kept as reserves)
Excess Reserves: The most liquid of all bank assets and the bank can use them to make other loans to banks (through the fed funds market) or other loans.
Cash Items in Collection Process
Checks in process of being cleared from another bank
Correspondent banking
Common in small banks
Small banks hold deposits in larger banks in exchange for a variety of services, including check collection, foreign exchange tran ...
The three main functions of money are as a medium of exchange, a unit of account, and as a store of value. Money must have six key characteristics - it must be durable, portable, divisible, stable in value, scarce, and universally accepted. The Federal Reserve, or the Fed, acts as the central bank of the United States and oversees the banking system and regulates the money supply. It performs governmental banking functions and uses tools like open market operations and interest rates to implement monetary policy and control inflation.
This document is from a PowerPoint presentation that accompanies an economics textbook. It summarizes 10 principles of economics: 1) People face tradeoffs in decision making; 2) Rational people make decisions by comparing marginal costs and benefits; 3) Trade between individuals can make everyone better off. It also discusses the role of markets and governments in organizing economic activity and some macroeconomic concepts like productivity, inflation, and the short-run tradeoff between inflation and unemployment.
Econ315 Money and Banking: Learning Unit 17:Bank Operation Basicssakanor
This document provides an overview of bank operations and balance sheets. It discusses how banks act as financial intermediaries by borrowing deposits and lending out loans. The key points covered are:
- A bank's balance sheet lists assets like reserves, securities, loans and liabilities like deposits and borrowings. Basic bank operations involve accepting deposits which increase reserves, and issuing loans which decrease reserves.
- Required reserve ratios determine the minimum level of reserves banks must hold. Excess reserves can be lent out as loans to earn interest income.
- Banks aim to charge higher interest on loans than what they pay out on deposits in order to generate profits from this spread. Off-balance sheet activities like loan sales and fees also contribute
1. The document is a PowerPoint presentation that outlines 10 principles of economics from a textbook.
2. It discusses how individuals make decisions by weighing costs and benefits at the margin, and how people respond to incentives.
3. Markets are generally good for organizing economic activity, though governments can sometimes improve outcomes during market failures.
The document discusses how the Federal Reserve responded to financial crises, including after 9/11 and the 2008 mortgage crisis. It describes actions the Fed took to increase liquidity and prevent panic, such as allowing banks to borrow more and purchasing government securities. This massive response after 9/11 helped prevent a financial panic. During the 2008 crisis, the Fed announced new programs to purchase corporate debt and extend loans to money market funds under pressure. These actions demonstrated the Federal Reserve's role as lender of last resort during times of financial distress.
The document discusses the U.S. financial system and how it coordinates saving and investment. It describes how financial institutions like banks and markets direct resources from savers to borrowers. It also explains how government policies on taxes, deficits, and investment credits can influence interest rates, saving, and investment in the market for loanable funds.
Assume that you recently graduated with a degree in finance and have.pdfaajitelectricals
Assume that you recently graduated with a degree in finance and have just reported to work as an
investment adviser at the firm of Balik and Kiefer Inc. Your first assignment is to explain the
roles financial intermediaries play in the U.S. banking system to Michelle Delatorre, a
professional tennis player who has just come to the United States from Chile. Delatorre is a
highly ranked tennis player who expects to invest substantial amounts of money through Balik
and Kiefer. She is also extremely bright, and, therefore, she would like to understand in general
terms what will happen to her money. Your boss has developed the following questions, which
you must answer to help explain the nature of financial intermediaries and the U.S. banking
system to Ms. Delatorre. a) What is a financial intermediary? What is the financial
intermediation process? b) What roles do financial intermediaries fulfill? c) What are the
different types of financial intermediaries? Give some characteristics that differentiate the
various types of intermediaries. d) Describe the banking system found in the United States. e)
What role does the Federal Reserve play in the U.S. banking system?
Solution
a) Financial intermediary isan institution, such as a bank, building society, or unit-trust company,
that holds funds from lenders in order to make loans to borrowers.
A financial intermediary is typically an institution that facilitates the channeling of funds
between lenders and borrowers indirectly. That is, savers (lenders) give funds to an intermediary
institution (such as a bank), and that institution gives those funds to spenders (borrowers).
b) There are two main roles in the financial intermediation process:borrowers, also known as
spenders andsavers, also called lenders. Let\'s look at borrowers first. Borrowers need money for
various reasons: to purchase a home, start a business, pay for business expenses and fund
programs. They need money to spend. Borrowers include individuals, companies and the
government. All three have a need to borrow money.
The second role in the process is savers. Savers have money, which is why they\'re also called
lenders. They have the money to lend. Savers not only have money in savings accounts, they
have money deposited in other interest earning products, such as retirement accounts and
certificate of deposits. Savers include individuals, companies and the government.
The mechanism whereby surplus funds from ultimate savers are matched to deficits incurred by
ultimate borrowers.The process by which ultimate savers are matched to ultimate borrowers.
c) The following institutions are or can act as financial intermediaries:
d) In 1913, the Federal Reserve Bank (the U.S. central bank, also known as “the Fed”) was
established, and given monopoly powers over member-bank policies and U.S. monetary policies
with the intendedpurpose of stabilizing short-term interest rates and preventing economic
downturns by providing as much liquidity as nec.
Case study is the most unsolved part in the Strategic management. There you need to highlight the case along with the academic knowledge. The key areas and the best solution are to be drawn every time. You might be thinking, how you can execute that easily, since you are having the least corporate exposure.
The document discusses the key components and participants in a financial system. It describes how a financial system bridges the gap between those who demand capital (borrowers) and those who have surplus capital (savers). The main participants are identified as households, non-financial corporations, governments, and financial corporations. Households and financial corporations are typically net savers, while non-financial corporations and governments are usually net borrowers. The financial system facilitates capital transfers between these groups through various financial institutions, services, instruments and markets. It also discusses the importance of safety, security and transparency in a financial system.
The document summarizes key concepts about money, the money supply, and monetary policy in the United States. It explains that the US dollar is issued by the Federal Reserve and backed by the US government. It describes how the Federal Reserve, made up of the Board of Governors and regional banks, implements monetary policy to control interest rates through managing the money supply. It also outlines how money serves important functions as a medium of exchange, unit of account, and store of value in the US economy.
This chapter discusses choosing appropriate statistical techniques for analyzing numerical and categorical data. For numerical variables, it identifies questions about describing characteristics, drawing conclusions about the mean/standard deviation, determining differences between groups, identifying influencing factors, predicting values, and determining stability over time. For each, it lists relevant techniques. For categorical variables, it addresses similar questions and outlines techniques like hypothesis testing, regression, and control charts. The goal is to match the right analysis to the data type and research purpose.
This document provides an overview of decision making techniques covered in Chapter 17. It begins by listing the learning objectives, which are to use payoff tables, decision trees, and criteria to evaluate alternative courses of action. It then outlines the steps in decision making, which include listing alternatives and uncertain events, determining payoffs, and adopting evaluation criteria. Several decision making criteria are introduced, including maximax, maximin, expected monetary value, expected opportunity loss, value of perfect information, and return-to-risk ratio. Payoff tables and decision trees are presented as methods for displaying decision problems. The chapter concludes by discussing how sample information can be used to revise old probabilities when making decisions.
This document provides an overview of time-series forecasting and index numbers. It discusses different time-series forecasting models including moving averages, exponential smoothing, linear trend, quadratic trend, and exponential trend models. It also covers identifying trend, seasonal, and irregular components in a time series. Smoothing methods like moving averages and exponential smoothing are presented as ways to identify trends in data. The document concludes by discussing linear, nonlinear, and exponential trend forecasting models for generating forecasts from time-series data.
This document provides an overview of multiple regression analysis. It introduces the concept of using multiple independent variables (X1, X2, etc.) to predict a dependent variable (Y) through a regression equation. It presents examples using Excel and Minitab to estimate the regression coefficients and other measures from sample data. Key outputs include the regression equation, R-squared (proportion of variation in Y explained by the X's), adjusted R-squared (penalized for additional variables), and an F-test to determine if the overall regression model is statistically significant.
This document provides an overview of simple linear regression analysis. It defines key concepts such as the regression line, slope, intercept, and correlation coefficient. It also explains how to evaluate the fit of a regression model using the coefficient of determination (R2), which measures the proportion of variance in the dependent variable that is explained by the independent variable. The document includes an example using house price and square footage data to demonstrate how to apply simple linear regression and interpret the results.
This chapter discusses chi-square tests and nonparametric tests. It covers chi-square tests for contingency tables to test differences between two or more proportions, including computing expected frequencies. The Marascuilo procedure is introduced for determining pairwise differences when proportions are found to be unequal. Chi-square tests of independence are discussed for contingency tables with more than two variables to test if the variables are independent. Nonparametric tests are also introduced. Examples are provided to demonstrate chi-square goodness of fit tests and tests of independence.
This chapter discusses analysis of variance (ANOVA) techniques. It covers one-way and two-way ANOVA for comparing the means of three or more groups or populations. The chapter explains how to partition total variation into between-group and within-group components using sum of squares calculations. It also describes how to conduct the F-test and make inferences about differences in population means using ANOVA tables and significance tests. Multiple comparison procedures for identifying specific mean differences are also introduced.
This chapter discusses two-sample hypothesis tests for comparing population means and proportions between two independent samples, and between two related samples. It introduces tests for comparing the means of two independent populations, two related populations, and the proportions of two independent populations. The key tests covered are the pooled variance t-test for independent samples with equal variances, separate variance t-test for independent samples with unequal variances, and the paired t-test for related samples. Examples are provided to demonstrate how to calculate the test statistic and conduct hypothesis tests to compare sample means and determine if they are statistically different. Confidence intervals for the difference between two means are also discussed.
This chapter discusses confidence interval estimation for means and proportions. It introduces key concepts such as point estimates, confidence intervals, and confidence levels. For a mean where the population standard deviation is known, the confidence interval formula uses the normal distribution. When the standard deviation is unknown, the t-distribution is used instead. For a proportion, the confidence interval adds an allowance for uncertainty to the sample proportion. The chapter also covers determining sample sizes and interpreting confidence intervals.
This chapter discusses sampling and sampling distributions. It defines key sampling concepts like the sampling frame, population, and different sampling methods including probability and non-probability samples. Probability sampling methods include simple random sampling, systematic sampling, stratified sampling, and cluster sampling. The chapter also covers sampling distributions and how the distribution of sample means approaches a normal distribution as the sample size increases due to the Central Limit Theorem, even if the population is not normally distributed. This allows inferring properties of the population from a sample.
This document discusses the normal distribution and other continuous probability distributions. It begins by listing the learning objectives, which are to compute probabilities from the normal, uniform, exponential, and binomial distributions. It then defines continuous random variables and describes key properties of the normal distribution, including its bell shape, equal mean, median and mode, and symmetry. Several examples are provided to illustrate how to compute probabilities using the normal distribution and standardized normal table. The empirical rules for the normal distribution are also discussed.
This chapter discusses important discrete probability distributions used in business statistics. It introduces discrete random variables and their probability distributions. It defines the binomial distribution and explains how to calculate probabilities using the binomial formula. Examples are provided to demonstrate calculating the mean, variance, and covariance of discrete random variables, as well as the expected value and risk of investment portfolios. Counting techniques like combinations are also discussed for calculating binomial probabilities.
This document provides an overview of basic probability concepts covered in Chapter 4 of Basic Business Statistics, 11th Edition. It introduces key probability terms like simple events, joint events, sample space, and contingency tables for visualizing events. It covers how to calculate probabilities of events both with and without conditional dependencies. Formulas are provided for computing joint, marginal, and conditional probabilities using contingency tables. The chapter also explains Bayes' Theorem for revising probabilities based on new information. An example demonstrates how to apply Bayes' Theorem to calculate the probability of a successful oil well given a positive test result.
This chapter discusses numerical descriptive measures used to describe the central tendency, variation, and shape of data. It covers calculating the mean, median, mode, variance, standard deviation, and coefficient of variation for data. The geometric mean is introduced as a measure of the average rate of change over time. Outliers are identified using z-scores. Methods for summarizing and comparing data using these descriptive statistics are presented.
This document discusses various methods for organizing and presenting categorical and numerical data using tables, charts, and graphs. It covers summarizing categorical data using summary tables, bar charts, pie charts, and Pareto diagrams. For numerical data, it discusses organizing data using ordered arrays, stem-and-leaf displays, frequency distributions, histograms, frequency polygons, ogives, contingency tables, side-by-side bar charts, and scatter plots. The goal is to effectively communicate patterns and relationships in the data.
How to Download & Install Module From the Odoo App Store in Odoo 17Celine George
Custom modules offer the flexibility to extend Odoo's capabilities, address unique requirements, and optimize workflows to align seamlessly with your organization's processes. By leveraging custom modules, businesses can unlock greater efficiency, productivity, and innovation, empowering them to stay competitive in today's dynamic market landscape. In this tutorial, we'll guide you step by step on how to easily download and install modules from the Odoo App Store.
CapTechTalks Webinar Slides June 2024 Donovan Wright.pptxCapitolTechU
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Gender and Mental Health - Counselling and Family Therapy Applications and In...PsychoTech Services
A proprietary approach developed by bringing together the best of learning theories from Psychology, design principles from the world of visualization, and pedagogical methods from over a decade of training experience, that enables you to: Learn better, faster!
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إضغ بين إيديكم من أقوى الملازم التي صممتها
ملزمة تشريح الجهاز الهيكلي (نظري 3)
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تتميز هذهِ الملزمة بعِدة مُميزات :
1- مُترجمة ترجمة تُناسب جميع المستويات
2- تحتوي على 78 رسم توضيحي لكل كلمة موجودة بالملزمة (لكل كلمة !!!!)
#فهم_ماكو_درخ
3- دقة الكتابة والصور عالية جداً جداً جداً
4- هُنالك بعض المعلومات تم توضيحها بشكل تفصيلي جداً (تُعتبر لدى الطالب أو الطالبة بإنها معلومات مُبهمة ومع ذلك تم توضيح هذهِ المعلومات المُبهمة بشكل تفصيلي جداً
5- الملزمة تشرح نفسها ب نفسها بس تكلك تعال اقراني
6- تحتوي الملزمة في اول سلايد على خارطة تتضمن جميع تفرُعات معلومات الجهاز الهيكلي المذكورة في هذهِ الملزمة
واخيراً هذهِ الملزمة حلالٌ عليكم وإتمنى منكم إن تدعولي بالخير والصحة والعافية فقط
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Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...EduSkills OECD
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