We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byIsai Kitts
Modified over 6 years ago
LESSON 24 THE FED’S TOOLBOX 24-1 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Bank reserves: Currency held by banks in their vaults plus their deposits at Federal Reserve Banks. Required reserves: Funds that a depository institution must hold in reserve against specified deposits as vault cash or deposits with Federal Reserve Banks. Excess reserves: Amount of funds held by a depository institution in its account at a Federal Reserve Bank in excess of its required reserve balance. Interest: The price of using someone else's money. Interest rate: The percentage of the amount of a loan that is charged for a loan. Terms to Know
LESSON 24 THE FED’S TOOLBOX 24-2 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Federal funds market: The market in which banks can borrow or lend reserves, allowing banks temporarily short of their required reserves to borrow from banks that have excess reserves. Federal funds rate: The interest rate at which a depository institution lends funds that are immediately available to another depository institution overnight. Federal Reserve System: The central bank system of the United States. Terms to Know
LESSON 24 THE FED’S TOOLBOX 24-3 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Monetary policy: The actions of a central bank to influence the cost and availability of money and credit to achieve the national economic goals. Tools that the Fed has in its toolbox to influence money supply/interest rates: Discount rate: The interest rate charged by the Fed to banks for loans obtained through the Fed's discount window. Open-market operations: The buying and selling of government securities through primary dealers by the Fed in order to influence the money supply. Reserve requirements: Funds that Banks must hold in cash, either in their vaults or on deposit at a Reserve Bank. Interest on reserves: Interest paid by Federal Reserve Banks on required and excess reserves held by banks. Terms to Know
LESSON 24 THE FED’S TOOLBOX 24-4 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Treasurer gets the Treasurer’s Balance Sheet for the Class. Federal Reserve (teacher) Primary Dealers (three students) Investors (six students) Banks (six students) The Federal Reserve gets money—reserves of $60,000— and the Federal Reserve Portfolio Tracker. Primary dealers buy and sell government securities from the Federal Reserve. Each investor gets a $10,000 Government Security and an Investor Balance Sheet. Each bank gets two deposit slips. Treasurer (one student) Open Market Operations Simulation
LESSON 24 THE FED’S TOOLBOX 24-5 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Investor Balance Sheet Assets (securities)Assets (deposits)Total Assets (securities + deposits) Initial End of Round 1 End of Round 2 Bank Balance Sheet Assets (money/reserves) Liabilities (deposits) Net Assets (assets - liabilities) Initial End of Round 1 End of Round 2 Federal Reserve Portfolio TrackerGovernment Securities Initial $0 End of Round 1 End of Round 2
LESSON 24 THE FED’S TOOLBOX 24-6 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Expansionary monetary policy: Actions taken by the Federal Reserve to increase the growth of the money supply and the amount of credit available. Bank reserves increase Interest rates decrease Borrowing increases Federal Reserve Primary Dealers Fed buys bonds Money Bonds Banks
LESSON 24 THE FED’S TOOLBOX 24-7 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Contractionary monetary policy: Actions taken by the Federal Reserve to decrease the growth of the money supply and the amount of credit available. Bank reserves increase Interest rates decrease Borrowing increases Federal Reserve Primary Dealers Banks Fed sells bonds Money Bonds
LESSON 24 THE FED’S TOOLBOX 24-8 HIGH SCHOOL ECONOMICS 3 RD EDITION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY Central bank: An institution that oversees and regulates the banking system and quantity of money in the economy. Dual mandate: The Federal Reserve's responsibility to use monetary policy to promote maximum employment and price stability. Price stability—A low and stable rate of inflation maintained over an extended period of time. The Fed has a longer-run goal of 2 percent inflation. Maximum employment—The Fed does not have a specific unemployment target but regularly publishes a forecast for the longer-run unemployment rate. Terms to Know
Money and the Banking System
Money and the Banking System. slide 2 Chapter objectives Money supply – how the banking system creates money – three ways the Fed can control the money.
Chapter 15 Monetary policy
Fiscal & Monetary Policy How the Federal Government can Influence the American Economy How the Federal Government can Influence the American Economy.
SESSION 5: THE FEDERAL RESERVE SYSTEM TALKING POINTS THE FEDERAL RESERVE SYSTEM 1.The Federal Reserve System (often referred to as “the Fed”) is the central.
The Federal Reserve System and Monetary Policy
THE IMPACT OF GOVERNMENT POLICY AND REGULATION ON BANKING
The Fed’s Toolbox What tools does the Federal Reserve System have at its disposal? The Fed’s Toolbox.
CHAPTER 15 MONETARY POLICY Tools 2 and 3. 2 nd Tool: Reserve Ratio Manipulation of the Reserve Ratio can influence the ability of commercial banks to.
Copyright McGraw-Hill/Irwin, 2005 Goals of Monetary Policy Consolidated Balance Sheet of the Federal Reserve Banks Tools of Monetary Policy Federal.
MONEY, BANKS, AND THE FEDERAL RESERVE. Objectives After studying this chapter, you will able to Explain why fiat money exists and why it is important.
The monetary policy uses three tactics to maintain the monetary stability. They are Money supply Money demand Managing the risks within banking.
The Federal Reserve Started in 1913 is response to yet another financial crisis Is Quasi-public Serves three purposes Regulates the payment system Supervises.
Introduction to Economics: Social Issues and Economic Thinking Wendy A. Stock PowerPoint Prepared by Z. Pan CHAPTER 22 MONETARY POLICY AND THE FEDERAL.
Banking & The Federal Reserve Modules Banks 1) Banks 2) How Banks Create Money 3) The Money Multiplier Banks have several important functions 1.Store.
Monetary Policy Using the amount of money and credit available to consumers to influence the economy.
The Federal Reserve System and Its Tools
Monetary Policy Section 5 Modules In Plain English--The Federal Reserve Video Take notes Focus on the Board of Governors (BoG) Federal Reserve.
Monetary Policy Tools. Monetary Policy Federal Reserve Act of 1913 created the Federal Reserve System –“The Fed” provides the U.S. banking system with.
© 2021 SlidePlayer.com Inc. All rights reserved.