The Federal Reserve and Monetary Policy. Chapter 16. Banking History. Monetary Policy: the actions the FED takes to influence the level of real GDP and the rate of inflation in the economy. The Federal Reserve Act of 1913. Passed by Congress to deal with problems of bank runs and panics.
crises from getting out
Consist of the Board of Governors (7) and then 5 of the twelve regional bank presidents.
NY Permanent, others rotate 1 year termsThe Federal Open Market Committee (FOMC)
Chapter 16 Section 2
Medicare, social security, and veteran benefits.
Banker and Agent
Has treasury department checking account
Agent by handling bonds, bills, notes and interest payments.Serving Government
Supervising Lending Practices
Lender of Last Resort
Expanded role due to financial crisis of 2008Serving Banks
Prevent inflation and keep real GDP growingRegulating the Money Supply
Chapter 16 Section 3
Chapter16 Section 4
Good timing smoothes out the business cycle. the economy.
Bad timing intensifies the cyclesThe Problem of Timing