ECON 200 Study Guide - Quiz Guide: Federal Deposit Insurance Corporation, Infant Industry Argument, Open Market Operation
Document Summary
Readings week 7: short-run macroeconomics the great recession and depression (cid:862)the terrible ten(cid:863) a(cid:271)ra(cid:373)s (ch. Monetary policy during the great depression how to turn a recession into a depression. Great depression = dark times (cid:373)o(cid:374)etar(cid:455) poli(cid:272)ies (cid:272)ould"(cid:448)e fi(cid:454)ed. Run on bank = chaos, run on many banks at same time = banking panic recessions worsen banking panic: why congress created the fed central banking system. Increased bank withdraws also led to the bank failures: less deposits, less loans available, less spending on goods and services. Open market operations the money available in the market: comes from fed purchases or sale of government bonds. When the fed buys us government bonds monetizes the debt. Fed set lo(cid:449)er (cid:862)dis(cid:272)ou(cid:374)t rate(cid:863) to tr(cid:455) to fi(cid:454) re(cid:272)essio(cid:374) Federal deposit insurance corporation (fdic) calmed bank panics. Fed could only produce so much backed by gold. Open market purchases gave money back into the market.
