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  • Econ - C16, P2 - WS - Key

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    The document provides information about monetary policy tools used by the Federal Reserve to influence the economy by controlling the money supply. It lists the reserve requirement, discount rate, and open market operations as three tools used by the Fed to adjust the money supply. It also defines key terms related to monetary policy including the interest rate, money supply, and business cycle.

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    The document provides information about monetary policy tools used by the Federal Reserve to influence the economy by controlling the money supply. It lists the reserve requirement, discount rate, and open market operations as three tools used by the Fed to adjust the money supply. It also defines key terms related to monetary policy including the interest rate, money supply, and business cycle.

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    49 views1 page

    Econ - C16, P2 - WS - Key

    Uploaded by

    TARSEHS
    The document provides information about monetary policy tools used by the Federal Reserve to influence the economy by controlling the money supply. It lists the reserve requirement, discount rate, and open market operations as three tools used by the Fed to adjust the money supply. It also defines key terms related to monetary policy including the interest rate, money supply, and business cycle.

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    ECONOMICS Chapter 16, Part 2 Monetary Policy Tools - Key


    1. The standard we are covering is SSEMA2. 2. Monetary policy is influencing the economy by controlling the nations money supply. 3. The interest rate is the cost of borrowing money. 4. An easy money policy is monetary policy that increases the money supply. 5. A tight money policy is monetary policy that reduces the money supply. 6. Three tools the Fed uses to adjust the money supply are: a. Reserve requirements b. The discount rate c. Open market operations 7. The reserve requirement is the formula used to compute the amount of reserves an institution must have. 8. Legal reserves are coins, currency, and deposits used to fulfill the Feds reserve requirement. 9. Excess reserves are bank money available for loans. 10. The discount rate is the interest rate that the Fed charges on loans to banks. 11. Open market operations refers to the buying and selling of government securities by the Fed. 12. The business cycle is a period of macroeconomic expansion followed by a period of contraction.

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