ECON 2305 1st Edition Lecture25Outline of Last Lecture I. More TaxesOutline of Current LectureI. Fed ToolsII. Open Market OperationsCurrent LectureFed Tools of Monetary PolicyDiscount LoansReserve requirementOpen market operations What is Open Market Operations?Buying/Selling of government securitiesKey tool of monetary policyFlexibleReversibleBuying bonds:Federal Reserve → Bonds ($$$) → Banks, Individuals, Mutual funds, states, pensions etc. Expansionary monetary policy → more moneySelling bonds:Complete opposite of buying bondsContractionary monetary policy → reducing the money supply Recession gap → buy bonds Monetarist View:Change in monetary policy → Change in excess reserves→ Multiple change in money supply→ Change in interest rate→ Change in investment→ Multiple change in GDPTaxes – ContinuedSmall Taxes: Utility billsGarbage TaxThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Gas TaxCable
View Full Document