central banking and monetary policy chapter 7 matakuliah: f0882 - economic analysis tahun: 2009
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CENTRAL BANKING AND MONETARY POLICY
Chapter 7
Matakuliah : F0882 - Economic AnalysisTahun : 2009
Bina Nusantara University 3
Learning Outcomes
• Central Banking and the Federal Reserve System
• The Effect of Money on Output and Prices
A Bird’s-Eye View of How Monetary Policy Affects Output and Inflation
The Major Players in Monetary Policy
While the Fed Ultimately Pursues Objectives like Stable Prices, Its Short-
Term Operations Focus on the Intermediate Targets
Federal Reserve Determines Federal Funds Rate
The Money Market
Changes in Monetary Policy or Prices Affect Interest Rates
Central Bank determines the Money Supply, Changing Interest Rates and Investment, Thereby Affecting GDP
An Expansionary Monetary Policy Shifts AD Curve to the Right, Raising Output and
Prices
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