ECON 2002.01 Lecture Notes - Lecture 23: Federal Open Market Committee, Open Market Operation, Money Supply

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Monetary policy (actions of the fed) - managing the money supply and interest rates (i), strives to achieve economic goals. Dual mandate of the fed: goal to both stabilize prices and lower unemployment (both can happen at the same time and fed has to choose what to do, one or the other) Goals also for a sound financial system and economic growth. 12 districts with a board of directors in dc. 7 members appointed by the president that serve 14 year terms. Check clearing, supply notes, hold deposits, supervise member banks, act as government"s banker, lender of last resort, agent for the dept. of treasury. 12 members (board of governors, pres. of federal reserve bank in ny, 4 other. Tools of the fed: (monetary policy - interest rates (i) and money supply) Buying/selling treasury bills (t bills) in the open market. Buying is an expansionary policy (used during a contraction) Selling is a contractionary policy (used during an expansion)

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