Monetary policy

Central bank is

• Is a nation’s main monetary authority

• Is a term that means “relating to money”

• Is a way of evaluating a country’s economy using statistical measures of its income, spending, and output

Is a term that means “relating to money”

• National income accounting

• Selling Government Securities

• Monetary

• Monetary policy

The interest rate that banks charge one another to borrow money

• Real GDP per capita

• Nominal GDP

• Federal funds rate

• Gross domestic product (GDP)

Federal Reserve System

• Is the value of reserves

• Is the central bank of the United States

• Is the market value of a final good and service produced by a country

Is the fraction of a bank’s deposits that it must keep in reserve

• Monetary policy

• Non-market activities

• Required Reserve Ratio

Monetary policy

• Includes the Fed’s actions that change the money supply in order to influence the economy

• Discount rate

• Is a plan to increase the money supply (money in circulation)

Discount rate

• The interest rate that banks charge their best customers

• Buy bonds on the market; reduce the reserve ratio

• The interest rate that the Fed changes when it lends money to other banks

The interest rate that banks charge their best customers

• Net Exports

• Discount rate

• Prime rate

Expansionary monetary policy

• Is a plan to increase the money supply (money in circulation)

• Is a plan to reduce the money supply (money in circulation)

• Theory that holds that rapid changes in the money supply cause economic instability

• Buy bonds on the market; reduce the reserve ratio

Contractionary monetary policy

• Theory that holds that rapid changes in the money supply cause economic instability

• Homemakers, work done at home, volunteering, etc

• Is a plan to reduce the money supply (money in circulation)

• Raise the discount rate, sell bonds