ECN 204 Chapter Notes - Chapter 15: Exchange Rate, Opportunity Cost, Liquidity Trap
12 Oct 2017
School
Department
Course
Professor
Document Summary
The objectives and the mechanics of monetary policy are covered in this chapter. Finally, there is a brief, but important, synopsis of mainstream theory and policies. The purpose of the concluding sections is to summarize all the macro theory developed so far and fit the pieces together as an integrated whole for students. There is a new last word on the worries and unintended consequences of the federal reserve"s. Quantitative easing (qe), zero interest rate policy (zirp), and operation twist, which lowered longer term interest rates. There are two new quick reviews for this chapter. All relevant data and tables have been updated. Comments and teaching suggestions: plan a visual demonstration of open market operations. The creation of new reserves in the banking system seems like a magician"s trick to most students, and the further expansion of the money supply through bank loans seems like just more smoke and mirrors.
