Chapter
14
The
Federal
Reserve
and
Monetary
Policy
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
14­1
Chapter
Objectives
The organization
System
of
the
Federal
Reserve
Reserve
requirements
The
deposit
expansion
multiplier
The
tools
of
monetary
policy
The Feds effectiveness in
inflation and recession
fighting
The
Banking
Act
of
1980
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
14­2
The
Federal
Reserve
System
The Federal Reserve Act
Federal Reserve System
of
1913
created
the
To provide for the establishment of Federal reserve
banks, to furnish an elastic currency, to afford
means of rediscounting commercial paper, to
establish a more effective supervision of banking in
the United States, and for other purposes
First
United States Bank
[
1791 ­
1811]
Second United
States
Bank [
1816
­
1836]
The charters of both were allowed to lapse
The 1907 bank crises caused the public to demand
the government do something to keep this from
happening again
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
14­3