Question

How does the open market committee committee work & what are the differences between Keynesian and monetarist monetary theories?

Answer 1

"open market" means that the Fed doesn't decide on its own the securities dealers with do business. It eastablishes a target for the fedral funds rate. Banks take overnight loans to meet the reserve ruquirements of the fedral.

Reserve system is a topic that is related to a letter.The federal funds rate is important because movements in the rate influence other interest rates in the economy.The fedral reserve uses open market operation to come at the target rate. . Open market operations made up of of the buying or selling of govt. securities. The Fed holds government securities, and so do individuals, financial institutions ,banks and also pension funds.

Keynesians Monetary .. 1 .It involves government expenditures.   

2. It  believe in the control of the supply of money   

in the economy and   allow the rest of the market to

fix itself  

3..It believe in consumption, government expenditures and net exports of the economy.Both theories are a reaction to depression economics.

4.these economists do not completely disregard the role the money supply has in the economy and on affecting gross domestic product,


Monetarist monetary..1..it involves the control of money in the economy

2..it believe in the control of the supply and allow the rest of the market to fix it self

3..believe that by fighting inflation with the supply of money, they can influence interest rates in the future.

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