1. The Federal Reserve System and Monetary Policy Chapter 16-1

2. Monetary Policy Actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy Actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy –In other words, what does the gov’t does to influence the flow of money in America

3. Reserves Deposits that a bank keeps readily available as opposed to lending them out Deposits that a bank keeps readily available as opposed to lending them out

4. Reserve Requirements The amount of reserves that banks are required to keep on hand –Why have this? Consumers and businesses need greater access to funds to see them expand (grow the economy) Banks need a source of emergency cash to prevent depositor panics that resulted in ‘bank runs’---taking lots of money out of a bank

5. Head of the FED Head of the FED Benjamin Bernake leads the FED. Benjamin Bernake leads the FED. The Chairman of the Board of Governors of the Federal Reserve System is the head of the central banking system of the United States and one of the most important decision-makers of American economic policy. The Chairman of the Board of Governors of the Federal Reserve System is the head of the central banking system of the United States and one of the most important decision-makers of American economic policy.

6. Benjamin Bernake Known as "Chairman of the Fed", the Chairman is the "active executive officer“ of the Board of Governors of the Federal Reserve System, which is an independent agency of the United States Government created by statute as part of the Federal Reserve System. Known as "Chairman of the Fed", the Chairman is the "active executive officer“ of the Board of Governors of the Federal Reserve System, which is an independent agency of the United States Government created by statute as part of the Federal Reserve System.

7. Benjamin Bernake He took over in 2006 when Alan Greenspan retired. President George W. Bush appointed him to the position as ‘Head of the FED’. He took over in 2006 when Alan Greenspan retired. President George W. Bush appointed him to the position as ‘Head of the FED’. President Barack Obama re-nominated him in 2009 to continue as ‘Head of the FED’ for another 4 year term. President Barack Obama re-nominated him in 2009 to continue as ‘Head of the FED’ for another 4 year term.

9. The FED was created in 1913 with the enactment of the Federal Reserve Act by President Woodrow Wilson. The FED was created in 1913 with the enactment of the Federal Reserve Act by President Woodrow Wilson. The chairman is appointed for a four-year term by the President of the United States, subject to confirmation by the Senate. The chairman is appointed for a four-year term by the President of the United States, subject to confirmation by the Senate.

10. Organization of the FED The chairman is one of seven members of the Board of Governors of the Federal Reserve System appointed by the President and confirmed by the Senate who have staggered terms of 14 years each. The chairman is one of seven members of the Board of Governors of the Federal Reserve System appointed by the President and confirmed by the Senate who have staggered terms of 14 years each. The district of New York and four other district bank Presidents makes up the 12 member group. The district of New York and four other district bank Presidents makes up the 12 member group.

12. Head Chairman of the FED By law, the Head of the FED reports twice a year to Congress on the Federal Reserve's monetary policy objectives. By law, the Head of the FED reports twice a year to Congress on the Federal Reserve's monetary policy objectives. The Head Chairman of the FED testifies before Congress on numerous other issues, and meets periodically with the Secretary of the Treasury. The Head Chairman of the FED testifies before Congress on numerous other issues, and meets periodically with the Secretary of the Treasury.

13. Federal Open Market Committee Federal Open Market Committee The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements. The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements. The Federal Open Market Committee is responsible for open market operations. The Federal Open Market Committee is responsible for open market operations.

15. Continue--FOMC Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

16. CITY LETTER NUMBER – –BostonA1 – –New YorkB2 – –PhiladelphiaC3 – –ClevelandD4 – –RichmondE5 – –AtlantaF6 – –ChicagoG7 – –St. LouisH8 – –MinneapolisI9 – –Kansas CityJ10 – –DallasK 11 – –San FranciscoL12 Federal Reserve Banks Which Federal Reserve Bank seal is on the money in your pocket?

17. The District Level of the FED

18. Member Banks The member banks are the individual banks located in the district. St. Clair Banks here in town is a part of the 9 th district which reports to Minneapolis. The member banks are the individual banks located in the district. St. Clair Banks here in town is a part of the 9 th district which reports to Minneapolis.

19. The End