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
