eco372 week 4 federal reserve presentation

8/13/2019 ECO372 Week 4 Federal Reserve Presentation

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Federal Reserve Presentation

Student Name

Principles of Macroeconomics/ECO372

Date

Instructor


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Federal Reserve

Controls Economy Money Supply Change Factors

Monitory Policy & Inflation

Reserve Ratio

Discount Rate

Open-Market Operations


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Money Supply Change Factors

Unsustainable Growth Add Money Supply

Sell bonds to Government

Inflation

Change the interest rate.

Increase Interest Ratesell government bonds

Lower the interest rate buy government bonds

High Unemployment

Increase Money Supply


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Monetary Policy & Inflation

Reserve Ratio Controls Money Supply in Circulation

Discount Rate

Interest Rate Charged by Fed


Buying Government Securities

Selling Government Securities


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Reserve Ratio

Money Supply Controlled by Reserve Deposit Raising Requirements

Withhold Larger Portion of Funds

Lowering Requirements

Releases More Funds


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Discount Rate

Higher Discount Rate Commercial Banks Pay More

Consumers Pay More

Difficult for Consumers to Borrow

Lower Discount Rate

Commercial Banks Pay Less

Consumers Pay Less

Reduces Cost to Stimulate Economy


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Most Used Monetary Policy

Accounting Practice Rather Than Printing Presses

Treasury Securities Bonds

Bills

Notes

Increase Money Supply Fed Buys Treasury Securities

Decrease Money Supply Fed Sells Treasury Securities

Decreases Money Supply


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Stimulus Program Affect on MoneSupply

Increases the amount of money in circulation Will eventually affect interest rates

Value of dollar goes down

Inflation goes up


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Money Supply Enough? Federal Fund Rate

Record Low: 0-0.25% (National Inflation Association, 2011)

Bank Prime Rate

Record Low 3.25% for 3 years. (National Inflation Association, 2011)

Total Money Supply

Over $14 Trillion (National Inflation Association, 2011)

Over 40% increase since 2011 (National Inf lation Association, 2011) 2011 Gross Domestic Product (GDP) - $67.7 Billion (Congressiona

Budget Office, 2012)

2011 Deficit - $10,127.6 Billion (Congressional Budget Office, 2o12)

2011 Deficit to GDP percentage 8.5%


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References Colander, D. C. (2010). Macroeconomics(8th ed.). Boston, M

McGraw-Hill/Irwin.

Congressional Budget Office (2012). Updated Budget ProjectFiscal Years 2012 to 2022. Retrieved on August 10, 2012 fromhttp://www.cbo.gov/publication/43119.

National Inflation Association (2011). The Federal Reserve RaRetrieved on August 20, 2012 from http://inflation.us/charts

Reynolds, H. (2001). The Federal Reserve System. Retrieved o

August 18, 2012 fromhttp://www.udel.edu/htr/American/Texts/fed.html .
http://www.cbo.gov/publication/43119http://inflation.us/charts.htmlhttp://www.udel.edu/htr/American/Texts/fed.htmlhttp://www.udel.edu/htr/American/Texts/fed.htmlhttp://inflation.us/charts.htmlhttp://www.cbo.gov/publication/43119

eco372 week 4 federal reserve presentation

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