CHAPTER 36
Interest Rates and Monetary P
, Chapter Contents
Interest Rates
The Consolidated Balance Sheet of the Federal Res
Tools of Monetary Policy
Fed Targets and the Taylor Rule
Monetary Policy, Real GDP, and the Price Level
The “Big Picture”
, Interest Rates Overview
The price paid for the use of money.
Many different interest rates.
Speak as if only one interest rate.
Determined by the money supply and mo
demand.
, Demand for Money
Why hold money?
Transactions demand, Dt
• Determined by nominal GDP
• Independent of the interest rate
Asset demand, Da
• Money as a store of value
• Varies inversely with the interest rate
Interest Rates and Monetary P
, Chapter Contents
Interest Rates
The Consolidated Balance Sheet of the Federal Res
Tools of Monetary Policy
Fed Targets and the Taylor Rule
Monetary Policy, Real GDP, and the Price Level
The “Big Picture”
, Interest Rates Overview
The price paid for the use of money.
Many different interest rates.
Speak as if only one interest rate.
Determined by the money supply and mo
demand.
, Demand for Money
Why hold money?
Transactions demand, Dt
• Determined by nominal GDP
• Independent of the interest rate
Asset demand, Da
• Money as a store of value
• Varies inversely with the interest rate
