New Credit Program at the Discount Window

The primary subject matter of this case concerns the effect of the new credit program at the discount window on the behavior of the federal funds rate. The objective is to teach students how the basic demand-and-supply framework is employed to analyze the conduct of monetary policy in the reserve market. This case would be appropriate for a money and banking class, a monetary economics class, a financial economics class, an intermediate or an advance macroeconomic theory class. Level of difficulty could be at three or four. The case is designed to be discussed in one and one-half hours and should take students less than three hours of outside preparation.