Federal Reserve by https://padlet.com/diazmelissa0181/sn8gznkqm23e Created by Melissa Diaz, Emily Castillo, and Danitza Paz en-us 2019-04-03 12:50:33 UTC 2019-04-03 13:10:28 UTC hello@padlet.com Definitions diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348038217  Federal Reserve System: the central bank of the United States
 Board of Governors: the governing body of the Fed
 Federal Open Market Committee (FOMC): the 12 member policymaking group within the Fed.  It has the authority to conduct open market operations.
]]> 2019-04-03 12:53:41 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348038217 Definitions diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348038528  Open Market Operations: the buying and selling of government securities (bonds) by the Fed
 Monetary Policy:  changes in the money supply, or in the rate of change of the money supply, to achieve particular macroeconomic goals
]]> 2019-04-03 12:54:21 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348038528 diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348039011  - Coordinates and controls the activities of the Federal Reserve System
- 7 Members
- 14 Year Terms
- Appointed by the President with Senate approval
- A governor is appointed every other year
- President designates one member as President for a 4 year term
]]> 2019-04-03 12:55:25 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348039011 diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348039700 - The major policy making group within the Fed is the Federal Open Market Committee
- Authority to Conduct Open Market Operations (Buying and Selling of Federal Securities)
- 12 Members
- 7 Board of Governors
- 5 District Bank Presidents (including New York)
]]> 2019-04-03 12:56:51 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348039700 diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348040369
- Control the Money Supply
- Supply the economy with paper money
- Provide check-clearing services
- Hold depository institutions’ reserves

]]> 2019-04-03 12:58:22 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348040369 diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348041152 - Supervise Member Banks
- Serve as the government’s banker
- Serve as the lender of last resort
Serve as a fiscal agent for the Treasury
]]> 2019-04-03 13:00:10 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348041152 Open Market Operations diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348041534  Open Market Operations: Buying and Selling U.S. Government Securities in the Financial Markets
 U.S. Securities:  bonds and bond-like securities issued by the U.S. Treasury
 Open Market Purchase: The buying of government securities by the Fed
 Open Market Sale:  The selling of government securities by the Fed
]]> 2019-04-03 13:01:06 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348041534 Open Market Purchases diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348041755 - The Fed receives the securities from a bank, and the bank’s reserves increase by the amount of the purchase (Reserves = Bank deposits at the Fed + Vault Cash).

 - When the banks have a reserve increase and no other bank has a similar decline, the money supply expands through a process of increased loans and checkable deposits.
]]> 2019-04-03 13:01:33 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348041755 Open Market Sales diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348042182  Assume the Fed sells securities to a bank.
- To pay for the securities, the Fed takes reserves from the bank.
- Because of the decrease in the bank’s reserves, the bank reduces total loans outstanding, which reduces the total volume of checkable deposits and the money supply.
]]> 2019-04-03 13:02:27 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348042182 diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348042594  The Fed can also influence the money supply by changing the required-reserve ratio.
 An increase in the required-reserve ratio leads to a decrease in the money supply
 A decrease in the required-reserve ratio leads to an increase in the money supply.
]]> 2019-04-03 13:03:27 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348042594 diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348042776  A bank can borrow from the federal funds market or from the Fed.
 Federal Funds Rate: The interest rate a bank pays for a loan in the federal funds market.
 Discount Rate:  The interest rate a bank pays for a loan from the Fed.
 When a bank borrows money from the Fed, the money supply increases because its reserves increase while the reserves of no other bank decrease.
]]> 2019-04-03 13:03:55 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348042776 diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348043188  Banks may believe that the Fed is hesitant to extend loans to take advantage of profit-making opportunities.
 The bank may not want to deal with the Fed bureaucracy that regulates it.
 The bank realizes that acquiring a loan from the Fed is a privilege and not a right, and doesn’t want to abuse the privilege.
]]> 2019-04-03 13:04:31 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348043188 Discount Rate Vs. Federal Funds Rate diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348043454  If the discount rate is significantly lower than the federal funds rate, most banks will borrow from the Fed.
An increase in the discount rate relative to the federal funds rate reduces bank borrowings from the Fed.
]]> 2019-04-03 13:04:51 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348043454 Tools which can be used to influence the money supply: diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348044137 - open market operations
- the required-reserve ratio
- the discount rate
]]> 2019-04-03 13:06:11 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348044137 The Fed prefers Open Market Operations diazmelissa0181 https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348044380 -Open market operations are flexible
-Open market operations can be reversed
-Open market operations can be implemented quickly
]]> 2019-04-03 13:06:36 UTC https://padlet.com/diazmelissa0181/sn8gznkqm23e/wish/348044380