👨‍🏫 Notes

Formulas for this lecture can be found in my online formula sheet and paper formula sheet.

Fed = The Central Bank of the US

Treasury = the US Government’s treasury

How does monetary policy work? Visualization/graphic.

View the full presentation here: https://prezi.com/view/AzqChnbTFeaAMICMVMWW/.

12 districts and 12 regional banks + the board of governors in DC:

A map of the twelve federal reserve districts

There is a lot of detail about the Fed’s history and structure in the first half of this lecture. You could rewatch or listen while you do chores.

Calculating an OMO is just like calculating a withdrawal or deposit from a bank, except the $\Delta \text{CHP}=0$ for an OMO, whereas it is equal to the initial withdrawal or the negative of the initial deposit in a deposit or withdrawal.

Last lecture: you make a deposit	This lecture: the Fed buys bonds
$Example: Total Change in Deposits and Money Supply, \$10k deposit, R = 10%, E = 0%$	$Example: Fed Buys \$1M in Bonds, R = 0%, E = 10%, with total change in deposits = \$10M$
$Example: Total Change in Deposits and Money Supply, \$100k - \$10k = \$90k$	$Example: Fed Buys \$1M in Bonds, \$10M + 0 = \$10M$

$Bonds example, part 1: Fed Sells \$1M in Bonds$

$Bonds example, part 2: Fed Sells \$1M in Bonds$

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