.
Printing press
Banks giving out loans
The Fed buying bonds
China providing dollars
Excess reserves
Money multiplier
Required reserves
Deposit
The amount of a deposit the bank may loan out. They CAN give the money out.
The amount of a deposit the bank must keep in its vault. They may not loan this money out.
The amount of a deposit the bank may loan out. They CAN give the money out.
The amount of a deposit the bank must keep in its vault. They may not loan this money out.
1 / Reserve Requirement
Excess reserves / required reserves
Required reserves / reserve requirement
1 / excess reserves
1
10
100
10%
$10
$100
$90
$9
$990
$1000
$9000
$900
2 x Reserve requirement
Total deposit - required reserve
1 / total deposit
Multiplier x excess reserve
Required reserve / 10%
.1 / multiplier
Discount rate
Reserve requirement
Stock options
Open market operations
Increases
Decreases
Same
Increases
Decreases
Same
Increases
Decreases
Same
Recession
Inflation
Normal Economy
Downturn
Normal Economy
Hot Economy
Never
Recession
Inflation
Easy Money
Tight Money
The time it takes for a policy change to take effect
The desired results happening too quickly
Out of date Fed technology
Not knowing accurate data
High reserve requirement
High Discount rate
Low Reserve Requirement
Low Discount Rate
Sell Bonds
Buy Bonds
High reserve requirement
High Discount rate
Low Reserve Requirement
Low Discount Rate
Sell Bonds
Buy Bonds
Raise Discount Rate, Lower reserve requirement, sell bonds
Raise discount rate, raise reserve requirement, sell bonds
Lower discount rate, lower reserve requirement, buy bonds
Lower discount rate, raise reserve requirement, sell bonds
Easy Money
Tight Money
Moral Persuasion
Easy Money
Tight Money
Moral Persuasion
Easy Money
Tight Money
Moral Persuasion