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United States (206,023)
Economics (193)
ECON 351 (21)
Chapter 14

Chapter 14_Fed Balance Sheet and Money Supply Process.docx

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ECON 351
Frank Sorokach

Chapter 14: Federal Reserve’s Balance Sheet and Money Supply Process  Federal Reserve’s Balance Sheet - How money supply determined via three actors: 1. Federal Reserve – responsible for controlling money supply and regulating banking system 2. Banking System – create the checking accounts that are the most important component of M1 measures of the money Supply 3. Nonbank Public – refers to all households and firms other than banks and decides the form in which they wish to hold money for instance, as currency or as checking account balances  The Monetary Base - sum of bank reserves and currency in circulation - Monetary Base = Currency in Circulation + Reserves of Banks 1. Currency in Circulation - paper money circulating outside of bank 2. Vault Cash - currency held by banks 3. Currency in M1 – currency held by the nonbank public - Currency in M1 = Currency in Circulation – Vault cash 4. Bank Res
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