The monetary policy

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Slide 1: Video
Economie

This lesson contains 19 slides, with interactive quizzes, text slides and 1 video.

Items in this lesson

Slide 1 - Video

Chapter 16
Section3: The Monetary Policy
Pages 490-497

Slide 2 - Slide

Objectives
Identify the Fed’s tools for monetary policies.
Summarize the tools of Fed for the monetary policy
Discuss the approaches taken by Fed to promote growth and stability



Slide 3 - Slide

Monetary Policy: involves Federal Reserve actions that change the money supply in order to influence the economy. 
Open Market Operations:are the sales and purchase of marketable federal government securities. This is the monetary policy tool most used by the Fed to adjust the  money supply. 

Slide 4 - Slide

Federal Fund Rate is the interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight.
 There are three actions the Fed can take to manage
the supply of money: open market operations, adjusting the reserve requirement, and   adjusting the discount rate. They may be taken individually or in combination with  one another.

Slide 5 - Slide

What is the sales and purchase of marketable federal government securities?
A
Monetary Policy
B
Fiscal Policy
C
Federal fund reserve
D
Open Market Operations

Slide 6 - Quiz

What is the difference between discount rate and prime rate?

Slide 7 - Mind map

(The prime rate tends to rise and fall as the discount rate does,
because banks charge their customers more than it costs them to borrow money from the Fed.)

Slide 8 - Slide

Slide 9 - Slide

When does the FFR rise?
A
The Fed buys bonds
B
The Fed creates stability
C
The Fed creates growth
D
The Fed sells bonds

Slide 10 - Quiz

Why is it inaccurate to say that the Fed sets
the federal funds rate?

Slide 11 - Mind map

(because the Fed does not set the rate directly but influences it
through open market operations)

Slide 12 - Slide


​The most important job of the Fed is to promote growth and stability in the American economy. The purpose of monetary policy is to curb inflation and reduce economic stagnation or recession. By focusing on these goals, the Fed tries to promote
full employment and growth without rapid increases in prices or high interest rates.

Slide 13 - Slide

Expansionary Policy is a plan to increase the amount of money in
circulation. Contractionary monetary policy is a plan to reduce the amount of money  in circulation. When the economy slows, the Fed uses expansionary monetary policy  to pump more money into the economy. When the economy is overheated, the Fed  uses a contractionary policy to reduce the amount of money in the economy.

Slide 14 - Slide

Which monetary policy is used when is more money less in circulation?
A
Aggregate demand policy
B
Contractionary Monetary policy
C
Expansionary monetary policy
D
Demand side policies

Slide 15 - Quiz

Which open market action would be
used to fight inflation?

Slide 16 - Mind map

Sells Bonds
Decreases it

Slide 17 - Slide

How would the Fed change the discount
rate to fight recession?

Slide 18 - Mind map

Give the important points of the lesson.

Slide 19 - Open question