Philip Leatherwood, Lecturer

Kazakhstan Institute of Management, Economics, and Strategic Planning

Week 7, Spring 2001

1. Money System
1. Fractional reserve system
2. The money multiplier
2. Changes in the money supply/interest rates
1. Change reserve ratio
2. Change discount rate
3. Open market operations
3. Money Policy--Changing money supply to encourage growth, full employment, or stable prices--
1. Can it work?
2. What will happen?
4. Adaptive Expectations vs. Rational Expectations
1. The Monetarist School
2. The Neo Classical School