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United States (206,039)
Economics (70)
ECON 2035 (13)
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Chapter 11

Chapter 11 The Money Supply And Interest Rates (got 93% on the test)

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Department
Economics
Course
ECON 2035
Professor
All Professors
Semester
Fall

Description
Chapter 11The Money Supply and Interest Rates SECTION111THEFEDERALRESERVESYSTEMFederalReserveActof1913 created theFederalReservesystem thirdattemptbytheUnitedStatestoformacentralbank oOneofthemostuniquelystructuredbanksalotlikeEuropeanoGreatdepressionoWallStreetdestruction1908MonetaryCommissionchargedtostudythebankingsystemandadjusttheproblemsoRepublicanPartyurbanrealitypartyoProgressorsdemocratscapturedcongressoRobertAlbrecnoonelikedhimcauseinthebigpocketofbankers1912oMoneytrusthearingsNYCwasrunbyagroupof11peopleoWoodrowWilsonelectedpresidentknewnothingaboutbankingoTheProposalGlassWillisProposalmainproblemdifferentpartsofcountryhadliquidityproblemProposalsplitintodifferentareasbankinoneareatowatchoverandifonebankhadaproblemwithreservestheycouldgetthemoneyfromanotherCapStonecoordinateactivitiesofdistrictbank1913oFederalReserveActfederalReservewascreatedhad20districtsTheFedSystem splitinto12districts banks Reserve BankswitheachdistrictcontainingaFederalReserveBankandtheBoardofGovernorswhichislocatedinWashingtonDC oEachDistrictBankhasa9memberboardofdirectors 6 ofthemembersareelectedbythecommercialbanksservedbytheDistrictBank Theother3 areappointedbytheBoardofGovernorsthenelectpresident oReservedbanks12privatelyownedbythememberbanks4800membersAdvisoryCouncil20membersadviseonbanksbutcannotmakethebankdoanythingoCapStoneinitiallyhadmembersthatwereexpertsofbankingandmembersofthepresientscabinetBankingActof1935changedCapStonetotheBoardofGovernorsoBoardofGovernorssevenmembersEachoneisappointedbythePresidentandconfirmedbytheSenateEachGovernorcanbeappointedtoone14yeartermCurrently2openspotonBoardofGovernorsExpertinEconomicorregulatorylawTwomembersoftheBoardserveasChairmanandViceChairmanEachofthesepositionsarealsoappointedbythepresidentandconfirmedbytheSenateThetermoftheChairmanBenBernankeandViceChairmanlastsfouryearsoMonetaryPolicyFederalOpenMarketCommitteeFOMCbodythatsetsthefedstargetsforthefederalfundsrateBoardofGovernorsandReserveBanksAllsevenBoardofGovernorsmembersthepresidentoftheNewYorkReserveBankfourothermembersmadeupoftheotherReservebankpresidentsonarotatingbasisTheFOMCmeetseverysixweeksResponsibilitiesoBoardofGovernorsSetreserverequirementsoReserveDictatesopenmarketoperationsoBothInterestrateonreserveoBothdecideondiscountratemoreBoardofGovernorsFedreservebudgetisselfsubstainingnotcontrolledbyUStreasuryBatonRougeDistrictdistrict6AtlantaDistrictNYisonlythatisitsowndistrict1913onlytoolFedshadisthediscountratetheonlyincomeNofundssohadtoraiseinterestratecausedrecessionOpenMarketOperationsm1920sdiscoveredbecauseboughttreasurybondsandsawanimmediateincreaseinmoneysupply
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