Economics 201 Review of Chapters 31 - 33

1. Chapter Review Economics 201 Review of Chapters 31 - 33

2. Chapter Review CHAPTER 31: Functions of Money (medium of exchange, unit of account, store of value) P.637 “Money Definition M1” P.638-39 What Backs Money Supply (money as debt, value of money, money and prices) P.640-42 Fed Reserve System & Banking System (fed governors, reserve banks, central bank, quasi-public bank, banker’s bank, FOMC, fed functions, independence) : P643-46 Financial Crisis of 2007 & 2008 (mortgage default, securitization, failures/near-failures financial firms, TARP, fed lender of last resort): P646-49

3. Chapter Review CHAPTER 32: Fractional Reserve System (goldsmiths, fractional reserve): P656-57 Single Commercial Bank (transactions 1 – 5): P657-60 Money Creating Transactions of Commercial Bank (transactions 6 – 7, profit and liquidity): P660-62 Banking System – Multiple Deposit Expansion (system’s lending potential, money multiplier, destruction of money): P663-67

4. Chapter Review CHAPTER 33: Interest Rates transaction & asset demand, equilibrium of rates, interest rates & bonds): P671-73 Consolidated Balance Sheet of Fed Reserve Bank (assets & liabilities): P673-75 Tools of Monetary Policy (open market operations, reserve ratio, discount rate, term auction facility): P675-80 Expansionary & Restrictive Monetary Policy: P681 - 82 Monetary Policy, Real GDP & Price Level (cause-effect, expansionary & restrictive monetary policy): P684-88 Monetary Policy – Evaluation & Issues (recent policy, problems/complications, cyclical asymmetry/liquidity trap): P688-92