1 / 14

Monetary Policy

Monetary Policy. Chapter 15. Chapter 15 Table 15.1. Fed Assets and Liabilities. Fed Assets and Liabilities. The Principal Asset is U.S. Treasury Bonds (Securities) The Principal Liability is Federal Reserve Notes Outstanding

sidonia
Download Presentation

Monetary Policy

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. Monetary Policy Chapter 15

  2. Chapter 15 Table 15.1 Fed Assets and Liabilities

  3. Fed Assets and Liabilities • The Principal Asset is U.S. Treasury Bonds • (Securities) • The Principal Liability is Federal Reserve Notes Outstanding • These nearly balance because the bonds were acquired putting the dollars into circulation • The Fed’s available stock of bonds could be used to remove the dollars from circulation • Bonds expire – dollars don’t

  4. Chapter 15 Figure 15.1 Putting Money into Circulation

  5. Chapter 15 Table 15.2 Changing the Reserve Ratio

  6. Chapter 15 Figure 15.2(a) The Impact of Changing the Money Supply on the Interest Rate

  7. Chapter 15 Figure 15.2(b) How Changing the Money Supply and the Interest Rate affect Investment Spending

  8. How Monetary Policy Affects Real Output and Employment • Increasing the Money Supply lowers interest rates • Lower interest rates lead to more borrowing and higher Investment spending (Ig) • Increasing AE and AD • Resulting in higher equilibrium GDP • And higher employment • But higher prices (inflation)

  9. Chapter 15 Figure 15.2(c)

  10. Chapter 15 Table 15.3

  11. Chapter 15 Figure 15.3 The Federal Funds Rate determines other Interest Rates

  12. Chapter 15 Table 15.4

  13. Chapter 15 Figure 15.4(a) Public Policy and AS

  14. Chapter 15 Figure 15.4(b) Fiscal and Monetary Policy and AD

More Related