Money, Banking, and Monetary Policy Cheat Sheet

by kali.winn98 via cheatography.com/26538/cs/7448/

Different types of financial assets Fiscal Policy Federal Reserve Board (Board of Money Supply
Governors) (cont)
Money Stocks Bonds Government Income Taxes What does the money

something shares in a Spending -created by the Federal Reserve Act of 1913 supply mean?

used to the certif​icate Increase in gov. Tax reductions The Federal Open Market Committee aids The money supply is
facilitate ownership of debt spending leads lead to more the Board of Governors in conducting the money in the
the of a issued by a to more income consum​ption. Monetary Policy . economy at M1.
exchange business business or = more buying and selling bonds
In a money market graph,
of goods a consum​ption
why is the Money Supply
and government
More Firms can AD + AS Graph curve vertical?
services
consum​ption produce more,
Money supply is
money is open leads to more which leads to
indepe​ndent of interest
measured market invest​ments by greater
rates because it is
in liquidity. operat​ions firms. invest​ments.
determined by
M1 is the
- examples above are monetary policy
highest
expa​nsi​onary fiscal policy actions of the Fed
liquidity
- the opposite (raise taxes + lower
(coins, What are the shifters of
gov spending) is cont​rac​tio​nary
cash, cd) money supply?
fiscal policy
fiat money: something that serves as 1. setting reserve
- these things shift aggregate
money but has no other important requir​ements, 2.
demand
uses setting federal funds
rate, 3. setting
Federal Reserve Board (Board
discount rates, 4. open
Monetary Policy of Governors)
P0 shows the market in equili​brium. P2 market operations
1. Change the required reserve ratio - -#1 there are shows a shift in AD, creating a
2. Change the discount rate indep​ende Goal: 7 board recess​ionary gap. How do banks create
3. Change the federal funds rate nt control members money?
4. Open-m​arket purchase of regulatory the who all Shifters of AD + AS
government bonds by the central agency money serve 14 After banks receive
bank Aggregate Aggregate Supply deposits from their
supply year
terms Demand customers, they put away

C​on​sum​ption I​nf​lat​ionary enough to meet required

-US -also, to they are
expect​ations reserv​es.
central stabilize chosen
bank the by the I​nv​est​ments R​es​ource prices The rest of the money in
banking president their excess reserves,
G​ov​ernment A​ctions of the
system they can loan out.
spending government
That loan gets spent in the
X​ports (net) P​ro​duc​tivity
economy.

This means they created

money because they have
the same money in one
person's savings that they
loaned out, and that went
into the economy.

Required reserves is the

percentage of a deposit a
bank is required to keep
(cannot be loaned out).

By kali.winn98 Published 9th March, 2016. Sponsored by ApolloPad.com

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 Money, Banking, and Monetary Policy Cheat Sheet
by kali.winn98 via cheatography.com/26538/cs/7448/

Money Market Graph Formulas to Know

Quantity Theory of MV =
Money PQ

Money Multiplier 1/RR

Quantity theory of money shows

that the money supply (M) will
affect the price level (P) and/or the
real output if the velocity of money
Money Demand
(V) is fixed in the short run.
Why is money demanded in an
economy? Phillip's Curve

1. to perserve wealth in liquid

form and 2. to use in
transa​ctions the market

What does the demand curve look

like?

Lower interest rates lead to a shows inverse relati​onship

higher demand for money. The
curve is downward sloping.
What are the shifters of money
demand?
between inflation and
unempl​oyment
if you want to lower inflation,
unempl​oyment will rise

1. Te​chn​ology, 2. Real GDP, 3.

In​sti​tut​ions, 4. Price Level
(TRIP)

Shifters of Money Supply

(extended)

The Rate the Fed charges

Discount banks to take out
Rate overnight loans from
them.

Federal Rate banks charge

Funds other banks to take out
Rate overnight loans

Open The Fed buying and

Market selling bonds
Operat​i
ons

Big Money=Buy; Small

Money=Sell

By kali.winn98 Published 9th March, 2016. Sponsored by ApolloPad.com

cheatography.com/kali-winn98/ Last updated 10th March, 2016. Everyone has a novel in them. Finish Yours!
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