HO_MB3e_IM_Ch14

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1、Chapter14 TheFederalReserve’sBalanceSheetandtheMoneySupplyProcess  203Chapter14TheFederalReserve’sBalanceSheetandtheMoneySupplyProcessn BriefChapterSummaryandLearningObjectives14.1TheFederalReserve’sBalanceSheetandtheMonetaryBase(pages462–470)ExplaintherelationshipbetweentheFed’sbalancesheeta

2、ndthemonetarybase.·TheFed’sbalancesheetliststheFed’sassetsandliabilities.ThereisacloseconnectionbetweenthemonetarybaseandtheFed’sbalancesheet.·ThemonetarybaseisthesumoftheFed’stwomajorliabilities:currencyincirculationandbankreserves.·ThemostdirectmethodtheFedusestochangethemonetarybaseisopenm

3、arketoperations,whichinvolvebuyingorsellingsecurities,generallyU.S.Treasurysecurities.·Thoughlesscommonlyused,theFedcanalsoincreaseordecreasereservesbymakingdiscountloanstocommercialbanks.·Althoughopenmarketoperationsanddiscountloansbothchangethemonetarybase,theFedhasgreatercontroloveropenmar

4、ketoperationsthanoverdiscountloans.14.2TheSimpleDepositMultiplier(pages470–474)DerivetheequationforthesimpledepositmultiplieranduseT-accountstoillustratemultipledepositexpansion.·Anincreaseinbankreservesresultsinroundsofbankloans,creationofcheckabledeposits,andanincreaseinthemoneysupply.These

5、roundsofdepositcreationmultiplytheinitialincreaseinreserves.·Thesimpledepositmultiplierrelatestheinitialchangeinreservestothechangeinthemoneysupplyandequals1dividedbytherequiredreserveratio.14.3Banks,theNonbankPublic,andtheMoneyMultiplier(pages474–486)Explainhowtheactionsofbanksandthenonbankp

6、ublicaffectthemoneymultiplier.·Increasesincurrencyholdingsorexcessreservesreducethemultipledepositcreationprocess.·Themoneymultiplieristheratioofthemoneysupplytothemonetarybase.·Arealisticmoneymultiplier(m)is:m=CD+1CD+rrD+ERD,where(C/D)isthecurrency-to-depositratio,(ER/D)istheexcessreserves-t

7、o-depositratio,andrrDistherequiredreserveratio.Copyright©2018PearsonEducation,Inc.Chapter14 TheFederalReserve’sBalanceSheetandtheMoneySupplyProcess  203·Beginninginthefallof2008thevalueofthemoneymultiplierdeclinedandremainedbelow1in2006,moret