Expansionary - Recession and Easy $
- OMO ( open market operation) - buy bonds
- Reserve Requirement - ↓
- Discount Rate - ↓
- Bank Reserves - ↑
- Money Supply - ↑
- Fed Fund Rate - ↓
- DM - ↓
- i - ↓
- Ig - ↑
- AD - ↑
- GDPr - ↑
- Value of $ - ↓
- OMO - sell bonds
- Reserve Requirement - ↑
- Discount Rate - ↑
- Bank Reserves - ↓
- Money Supply - ↓
- Fed Fund Rate - ↑
- DM - ↑
- Ig - ↓
- AD - ↓
- GDPr - ↓
- Value of $ - ↑
Addition: Monetary Policy is always conducted by the Fed.
ReplyDeleteIt would be beneficial to recall that since an increase in the money supply is a shift to the right, and a decrease is a shift to the left, you can identify the monetary policy by the direction of the shift. Expansionary is always to the right, and contractionary is left.
ReplyDeleteIt would be helpful to mention that fiscal monetary policy and money supply is controlled by the Fed. Also it would help to talk about the Money Market where the Fed and users of the money interact, determining the nominal interest rate. The Money Market is depicted on our notes as a graph where Money supply and money demand changes when quantity of money increases or decreases, therefore changing the nominal interest rate as well.
ReplyDelete