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Federal Reserve and Monetary Policy. April 23 rd , 2014. Agenda. The Federal Reserve and Monetary policy Take hand-written notes from this Power Point Complete History of the Federal Reserve Timeline Activity (directions on last slide of this document). Monetary Policy.
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Federal Reserve and Monetary Policy April 23rd, 2014
Agenda • The Federal Reserve and Monetary policy • Take hand-written notes from this Power Point • Complete History of the Federal Reserve Timeline Activity (directions on last slide of this document).
Monetary Policy • The term "monetary policy" refers to what the Federal Reserve, the nation's central bank, does to influence the amount of money and credit in the U.S. economy. What happens to money and credit affects interest rates (the cost of credit) and the performance of the U.S. economy. • If the supply of money and credit increases too rapidly over time, the result could be inflation.
Monetary Policy Goals • The goals of monetary policy are to promote maximum employment, stable prices and moderate long-term interest rates. By implementing effective monetary policy, the Fed can maintain stable prices, thereby supporting conditions for long-term economic growth and maximum employment.
Tools of Monetary Policy • Reserve Requirements – the Fed mandates banks to set aside a certain amount of money rather than lend it all to customers. High reserve requirements reduce the amount of money available for lending. • Discount Rate – the interest rate the Fed charges commercial banks for credit. Thus, affecting rates the banks charge customers. A high discount rate discourages bank borrowing and reduces lending activity. • Open Market Operations – refers to the Fed buying or selling of Treasury securities (i.e. bonds, notes, bills). When the Fed buys these securities it increases the money supply.
Federal Reserve Timeline Assignment • In one PPT slide, summarize 5 historical dates about the Federal Reserve System (from 1913 to present). • Your slide should include 5 separate bullets, no longer than 2 sentences each, and 5 pictures that represent each historical event (pictures other than the ones already on the web page). • Use this Federal Reserve Timeline link: http://www.federalreserveeducation.org/about-the-fed/history/
