BMGT 380 Lecture Notes - Lecture 1: Commercial Paper, Money Supply, Deflation
Document Summary
Gdp: the market value of all final goods & services produced within a country in a given period of time. Goods are valued at their market prices, so: The monetary liabilities of the fed include: Currency in circulation: the physical currency in the hands of the public, which is accepted as a medium of exchange worldwide. Reserves: all banks maintain deposits with the fed, known as reserves. Purchases and sales of government securities and commercial paper by a central bank in an effort to regulate the money supply and credit conditions. When the central bank buys securities on the open market, it increases the reserves of commercial banks, making it possible for them to expand their loans and investments. Repurchase agreements: the fed purchases securities, but agrees to sell them back within about 15 days. Matched sale-purchase transaction: essentially a reverse repo, where the. Fed sells securities, but agrees to buy them back.