BUS 200 Lecture Notes - Lecture 2: Fiscal Policy, Federal Open Market Committee, Open Market Operation
31 Mar 2017
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Document Summary
Federal reserve: controls monetary policy, most powerful institution for economic policy: rescued financial system form collapse in 2008 (ben bernaki, 12 district banks, federal open market committee: (fomc) policy makers, meet every 6 weeks. Consists of 7 governors, ny federal president, 4 others (rotate: regulator of banking system and perform some operations, collect data on economy (district banks, try to control inflation: % change in price index. Inflatoin is measured by cpi2013 cpi2012 / cpi2012. Cpi: consumer price index: all in cpi, core cpi: excludes food and energy (volatile, gdp = consumption + investment + government + net exports, open market operations: how the fed. Reserve tries to affect interest rates (done by. When interest rates are low, investments are better and consumption increases. Buys and sells treasury bonds: fed funds rate: main target for monetary policy, overnight lending rate for banks buys bonds: price of bonds go up and the interest rates go down.
