CHAPTER Who Controls the Money Supply and How? Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-1 M2 Money Supply ≡ M2 Money Multiplier × Monetary Base Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-2 Framework for Conceptualizing Causes of Monetary Base Changes Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-3 What Causes Changes in the Monetary Base? Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-4 What Causes the Monetary Base to Increase? Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-5 Assets a Central Bank Could Purchase to Increase the Monetary Base Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-6 Assets Purchased by Central Banks Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-7 Sources of Money Supply Changes Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-8 Effects of Different Reserve Requirements Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M8-1 Effects of a $10 Million Withdrawal from a Bank with No Excess Reserves Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved U.S Federal Reserve Note Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved U.S Federal Reserve Note Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-5 Open Market Operations: Central Bank Purchases Securities from Banks Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-6 Open Market Operations: Central Bank and Individuals or Companies as Counterparties Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-7 Effects When ECB Buys Yen from European Banks Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-8 Effects When ECB Buys Yen from Japanese Banks Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-9 Effects When ECB Buys Yen from the Nonbank Public or from Governments Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-10 Effects of Discount Loans from the Central Bank Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-11 Structure of U.S Banks and their Assets, June 30, 2005 Source: Federal Financial Institutions Examination Council, ‘‘Assets, Liabilities, and Net Worth of U.S Commercial Banks, Thrift Institutions and Credit Unions as of June 30, 2005,’’ 2005 Annual Report, http://www.ffiec.gov/PDF/annrpt05.pdf, 21 (accessed September 11, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-12 Structure of the Federal Reserve System Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-13 Map of the Federal Reserve Districts Source: Board of Governors of the Federal Reserve System, Washington, D.C., http://www.federalreserve.gov/otherfrb.htm (accessed September 11, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-14 Central Bank Independence versus Inflation Source: Alberto Alesina and Lawrence H Summers, ‘‘Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence,’’ Journal of Money, Credit and Banking 25, no (May 1993) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-15 Central Bank Independence versus Inflation Volatility Source: Alberto Alesina and Lawrence H Summers, ‘‘Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence,’’ Journal of Money, Credit and Banking, 25, no (May 1993) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-16 Central Banks around the World Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8-16 Continued Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved ... What Causes the Monetary Base to Increase? Copyright© 2 008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-5 Assets a Central Bank Could Purchase to Increase the Monetary... Monetary Base Copyright© 2 008 South-Western, a part of Cengage Learning All rights reserved Exhibit A8 -1 Major Accounts in a Central Bank Balance Sheet Copyright© 2 008 South-Western, a part of... Monetary Base Copyright© 2 008 South-Western, a part of Cengage Learning All rights reserved Exhibit 8-6 Assets Purchased by Central Banks Copyright© 2 008 South-Western, a part of Cengage Learning All