BY KA I T L I N K I TC H E N S

FEDERAL RESERVE WEB QUEST

MAJOR EVENTS TIMELINE

1791- Print first money

1863- National Banking

Act

1907- Wall

Street Fail

1913- Federal Reserve System

born

1929- Great

Depression

1935- Banking Act of

1935

1951- The Treasury Accord

1980- Monetary Control

Act

2011- 9/11 occurs

2003- Discount Window

Operation Changes

2007- mini great

depression occurs

STRUCTURE & FUNCTIONS

Board of GovernorsChairman, Vice Chairman

Federal Open Market

Committee

Thrift Institutions

Advisory Council

Advisory Committ

ess

Federal Reserve Banks (12)

Federal Reserve branches (25)

Member Banks (3,543)

Consumer Advisory Council Federal

Advisory Council

QUIZ RESULTS

FEDERAL RESERVE DISTRICTS

•ATLANTA IS NUMBER 6

MONETARY POLICY

• 2 basic goals, to indorse maximum bearable output and employment and to indorse stable prices.

• The tool they use is the federal fund rate through the open market operation, federal funds market.

• Open market operations are the tool the federal government uses to affect the supply of reserves in the banking system.

• The FOMC is the system that is mainly in charge of going through with the formulation and conduction of the monetary policy.

• They typically conduct open market operations several times a week to prevent technical, temporary forces from moving the effective federal funds rate too far from the intended rate.

FEDERAL TOOL KIT DESCRIPTIONS

• Tight or Easy Monetary Policy- used to reduce the growth of money & credit • Discount Rate- the interest rate used in discount

cash flow analysis to determine the present value of future cash flow• Open Market Operations- make adjustments in

the availability and price of short term funds to banks. This is the most important policy tool.• Reserve Requirements- the ability of the Feds’ to

raise or lower banks’ reserve requirement.

IN DEPTH- WHO SETS THE MONETARY POLICY?

• The Federal Reserve set the Monetary Policy. They overlook the amount of money and credit is in the US Economy and influence it as well. Influencing this, or making changes, directly affects the interest rate, (the cost of credit), and what happens to the US Economy. Putting this is more simple terms, if the cost or credit is minimized, more people will borrow money and the economy will stir up.

NEW VOCABULARY

• Lender of Last Resort- describing the Federal Reserve’s role in providing funds to financial institutions in a financial crisis• Humphrey- Hawkins Testimony- congressional

testimony by the Federal Reserve Chairman about the goals and objectives, and conduct of monetary policy.• Discount Window- lending facility through which

each Federal Reserve Bank extends and loans to banks and other depository financial institutes.

PLAYING THE GAME

• At first it was hard to keep the economy on track, but after playing around with numbers and getting the hang of it, I did quite well.