The Feds
What are the Feds three jobs?
monetary policy, supervision and regulation, and payment services
Explain Reserve Rate.
the portion of reservable liabilities that commercial banks must hold onto, rather than lend out or invest
What have the Feds done to help the current Economic Situation?
raised the economies short term interest rate target and reducing its holdings of long term assets
How does Discount Rate combat unemployment?
influencing borrowing costs, consumer spending and business investments
Give a description of the Open Market Committee.
a market with no regulatory barriers, such as taxes, licensing requirements and government subsidies.
Explain Discount Rate.
the interest rate used to calculate the present value of future cash flows from a project or investment
How would Classical economist feel about the Fed?
they would not support it because they think the government should not be involved in economics
How does Open Market Operations combat unemployment?
by lowering interest rates
What are the Feds two goals?
achieve maximum employment and keep prices stable
How does Reserve Rate combat unemployment?
raises interest rates to slow the economy and bring inflation down
What is the current Economic situation?
a slow down of growth is the economy
What are the three monetary policy tools?
open market operations, the discount rate, and reserve requirements
Give a description of the Board of Governors.
guides the operation of the federal reserve system to promote the goals and fulfill the responsibilities given to the Feds by the Federal reserve act
Explain Open Market Operations.
the purchase and sale of securities in the Open Market by a central bank
How would a Keynesian Economist feel about the Fed?
would see it as a positive thing because the government is involved in making the financial system stable
What is a Keynesian Economist?
the idea that governments should play an active role in their countries' economies
What is the job of the Chair of the Fed?
to manage all aspects of any operations of The Fed
How do Reserve Rate, Discount Rate, and Open Market Operations combat inflation?
raising interest rates or restricting the money supply
What is the difference between a Classical and Keynesian Economist.
keynesian- government should be involved in economics
classical- economy is self regulating
What is a Classical Economist?
they believe that the economy is self‐regulating.