1 / 11

Chapter 4 – The financial market

Chapter 4 – The financial market. Money demand Money supply Determination of the interest rate. Money demand. Money supply M s = M. Figure 4-2 The Determination of the Interest Rate. Changes to M D and M s. Model. Money demand = Mone y supply.

dora
Download Presentation

Chapter 4 – The financial market

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Chapter 4 – The financial market • Money demand • Money supply • Determination of the interest rate

  2. Money demand

  3. Money supply Ms = M Figure 4-2 The Determination of the Interest Rate

  4. Changes to MDand Ms

  5. Model

  6. Money demand = Money supply Supply of money = Demand for money So, what happens when the Fed increases money supply H? It increases by more than one-to-one!

  7. Multiplier = $1000

  8. M1 since 2005

  9. Discount rate

  10. Required Reserve Ratio Was $44 million before the crisis

  11. Open Market Operations since 2005

More Related