Principles of Macroeconomics homework

MONEY SUPPLY, BANK RESERVES, and FEDERAL RESERVE STIMULUS (Data Set #3.1)

Bank Reserves (Annual, averaged from daily report; millions of current dollars: Source, Economic Report of the President: 2012, 2010, 2009)

Year Total Non-Borrowed Borrowed Monetary Total Reserves Inflation Rate

Reserves Reserves Reserves: Base as % of the (%∆ CPI)

Monetary Base

2000 38,675 38,465 210 584,997 6.61% 3.36%

2001 41,404 41,338 67 635,642 6.51% 2.85%

2002 40,287 40,207 80 681,540 5.91% 1.58%

2003 42,565 42,519 46 720,182 5.91% 2.27%

2004 46,462 46,400 63 759,106 6.12% 2.66%

2005 45,002 44,833 169 787,340 5.71% 3.38%

2006 43,132 42,941 191 812,342 5.31% 3.23%

2007 43,156 27,726 15,430 824,753 5.23% 2.84%

2008 820,217 166,651 653,565 1,654,873 49.56% 3.84%

2009 1,138,685 968,758 169,927 2,018,795 56.40% - 0.36%

2010 1,077,351 1,031,863 45,488 2,010,240 53.59% 1.64%

2011 1,597,185 1,587,659 9,526 2,610,864 61.17% 3.16%

Year Total Required Excess Borrowed Non-Borrowed Change in

Reserves Reserves Reserves Reserves Excess Reserves Liquidity

(%∆ NBER)

2000 38,675 37,349 1,325 210 1,115 -----

2001 41,404 39,761 1,643 67 1,576 41.35%

2002 40,287 38,279 2,008 80 1,928 22.34%

2003 42,565 41,519 1,046 46 1,000 -48.13%

2004 46,462 44,555 1,908 63 1,845 84.5%

2005 45,002 43,102 1,900 169 1,731 -6.18%

2006 43,132 41,270 1,862 191 1,671 -3.47%

2007 43,156 41,372 1,784 15,430 -13,646 -916.64%

2008 820,217 52,899 767,318 653,565 113,753 933.6%

2009 1,138,685 63,486 1,075,199 169,927 905,272 695.82%

2010 1,077,351 70,716 1,006,636 45,488 961,148 6.17%

2011 1,597,185 94,868 1,502,317 9,526 1,492,791 55.31%

Real Sector in the Equation of Exchange (Billions of Current Dollars: Source, Economic Report of the President: 2012, 2010, 2009)

Year Nominal M2 Velocity Change in Change in

GDP of M2 Velocity Liquidity

2000 9,951.5 4911.6 2.03 ----- -----

2001 10,266.2 5424.9 1.89 -6.6% 41.35%

2002 10,342.3 5768.7 1.79 -5.3% 22.34%

2003 11,142.2 6058.6 1.83 2.5% -48.13%

2004 11,853.8 6404.1 1.85 0.6% 84.50%

2005 12,623.0 6667.9 1.89 2.3% -6.18%

2006 13,377.2 7059.7 1.89 0.0% -3.47%

2007 14,028.7 7484.5 1.87 -1.1% -916.64%

2008 14,291.5 8231.7 1.73 -7.4% -933.6 0%

2009 13,939.0 8514.2 1.64 -5.7% 695.82%

2010 14,526.5 8796.4 1.65 0.1% 6.17%

2011 15,087.7 9640.1 1.56 -5.2% 55.31%

Additional Information About the Crisis Before it Moved into the Real Sector:

Date Dow Jones Industrial Average

at Close of Trading

Jan 2, 2008 13,043.96

Mar 31, 2008 12,262.89

June 30, 2008 11,350.01

Sept 30, 2008 10,850.66

Dec 31, 2008 8,776.39

FOMC Focus on the Second Half of 2008:

(Source: St. Louis Federal Reserve Bank)

Date Discount Rate FFO Target Rate FFO Rate

Sept 26, 2007 5.25%

Dec 24, 2007 4.25%

July 9, 2008 2.25% 2.00% 1.95%

Aug 13, 2008 2.25% 2.00% 1.99%

Sept 24, 2008 2.25% 2.00% 1.54%

Oct 15, 2008 1.75% 1.50% 0.96%

Oct 22, 2008 Begin interest payments on required and excess reserves

Nov 5, 2008 1.25% 1.00% 0.24%

Dec 24, 2008 0.50% 0.25% 0.11%