Brief Outline of Topics Covered in Lecture 6
Chapter 14 Determinants of the Money Supply
The Money Supply Model and the Money Multiplier
- Deriving the Money Multiplier
Factors That Determine the Money Multiplier
- Changes in the Required Reserve Ratio, r
- Changes in the Currency Ratio, c = C/D
- Changes in the Excess Reserves Ratio, e = ER/D
Additional Factors That Determine the Money Supply
- Changes in the Nonborrowed Monetary Base, MBn
- Changes in Borrowed Reserves BR, from the Fed
Chapter 15 Tools of Monetary Policy
The Market for Reserves and the Federal Funds Rate
- Supply and Demand in the Market for Reserves
- How Open Market Operations, Discount Lending, and Changes in Reserve Requirements Affect the Federal Funds Rate
Open Market Operations
- Daily Conduct
- Advantages of Open Market Operations
Discount Policy
- Operations of the Discount Window
- Lender of Last Resort
- Advantages and Disadvantages of Discount Policy
Reserve Requirements
- Disadvantages of Reserve Requirements
Materials from class:
Video:
Lecture 6 - Chapter 14, pgs. 351-367; Chapter 15, pgs. 373-389
Google Video
Additional Reading:
SF Fed National Outlook
Prospects for the
U.S. Economy, by Janet Yellen, President SF Fed
Application:
Minutes of Federal Open Market Committee, September 20, 2006 (released 10/10/06).