DEBIT CARDS VS. CREDIT CARDS How are they different???????

THE FEDERAL RESERVE The government organization whose main function is to control our nation’s money supply. Chart p. 396

M1 MONEY SUPPLY M1 Money supply equals the sum of; Currency (paper) Coins Checking Account Deposits

MONEY SUPPLY & GDP How much M1 would be needed to buy $17,300,000,000,000

THE FEDERAL RESERVE The “FED” is a Banker’s bank! You bank at Chase, Chase banks with the FED.

HEAD OF THE “FED” Janet Yellen Appointed by the president; 4 year term.

MONETARY POLICY The “FED’S” use of the money supply to achieve macro goals.

LOOSE MONEY POLICY The fed’s lowering of interest rates to put more money into the economy via borrowing and spending Helping with a recession.

Loose Monetary Policy

TIGHT MONEY POLICY The fed’s raising of interest rates to limit money going into the economy, discouraging borrowing. Helps control inflation.

Tight Monetary Policy

FED TOOLS TO CONTROL MONEY SUPPLY Sets reserve requirement. 10% vs. 20% Open Market Operations – Fed’s buying and selling of bonds to control interest rates and lending/spending. Discount Rate –interest rate charged to banks borrowing directly from the fed. THESE TOOLS INFLUENCE INTEREST RATES!!!!!!