THE NUTS AND BOLTS OF MONETARY POLICY

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THE NUTS AND BOLTS OF MONETARY POLICY Open-Market Operations The Feds useful tool is “open-market operations.” selling or buying government in the open market, the Fed can lower or raise bank reserves, These so-called open-market operations are a central bank’s most important monetary-policy instrument. In setting policy, the FOMe decides whether to pump more reserves into the banking system by buying […]

Balance Sheet of the Federal Reserve Banks

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Balance Sheet of the Federal Reserve Banks In analyzing central banking, we need to describe the consolidated balance sheet of the Federal Reserve System, shown in Table 26-1 on page 546. U.S. government securities (e.g., bonds) make up most of the Fed’s assets, The small items, loans and acceptances, are primarily loans or advances to commercial banks, The interest rate the Fed […]

Overview of the Fed’s Operations

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Overview of the Fed’s Operations Figure 26-3 shows the various stages of Federal Reserve operations as seen by-the Fed. The Federal Reserve has at its disposal a number of policy instruments. These can affect certain intermediate targets (such as reserves, the supply, and interest rates). These instruments are intended ‘to help achieve the ultimate objectives of a healthy economy- low inflation, rapid […]

Policy Objectives

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Policy Objectives What are the goals of the Federal Reserve System? This is how tire Fed sees its role: The Federal Reserve’s objectives include economic growth in line with the economy’s potential to expand; a high level of employment: stable prices (that is, stability in purchasing power of the dollar) and moderate long-term interest rates. l While’ it is not always easy to […]

Who’s in Charge?

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Who’s in Charge? The core of the Federal Reserve is the Board of Gougers of the Federal Reserve System, which consists of seven members nominated by the president and confirmed by the Senate to serve overlapping terms of 14years. Members of the board are generally bankers or econ .mists who work full time at the job. The key decision-making body in […]

A. CENTRAL BANKING AND THE FEDERAL RESERVE SYSTEM

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A. CENTRAL BANKING AND THE FEDERAL RESERVE SYSTEM THE FEDERAL RESERVE SYSTEM History and Purpose. During the nineteenth century, the United States was plagued by banking panics. These occurred when people attempted to turn their bank deposits into example on bank panics in the last chapter). When they arrived at the banks, they found that the banks had an […]

Central Banking and Monetary Policy

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Central Banking and Monetary Policy Where would you look to find the most important macroeconomic policymakers today? In the White House? Or in the Congress? Perhaps in the United Nations or the World Bank? Surprisingly, the answer is that you Outlook in an obscure marble building in Washington that houses the Federal Reserve System. It is here that the […]