ECON 002- Midterm Exam Guide - Comprehensive Notes for the exam ( 27 pages long!)
13 Oct 2017
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March 28th, 2017 (part 2 after midterm 2) Money supply in the short run: conventional monetary policy, unconventional monetary policy. Janet yellen (fomc chair) video (very conventional): www. federalreserve. gov/videos. htm. When we were thinking about the long run, it was not important to distinguish among interest rates; there was the interest rate. In the short run, we have to make distinctions. Ex: effective federal funds rate, 10-year treasury constant maturity rate, 3-month. Treasury bill: secondary market rate, 30-year fixed rate mortgage average in the us, The interest rate that the fed is interested in is the federal funds rate. At the end of each day, banks with extra reserves lend to banks with insufficient reserves. This activity is called the federal funds market. The federal funds rate is the interest are that banks charge for this lending. It"s a really short term interest rate because it is for an over-night loan.
