CHAPTER 32 OUTLINE

CHAPTER 32 OUTLINE - reserve requirement Discount rate-The interest rate that the Federal Reserve Banks charge on the loans they make to commercial

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Economics Chapter 32 Monetary Policy -A central bank’s changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth. Interest -The payment made for the use of money (of borrowed funds) Transaction demand - (for money)- The amount of money people want to hold for use as a medium of exchange (to make payments), varies directly with nominal GDP. Asset demand - (for money)- the amount of money people want to hold as a store of value, this amount varies inversely with the interest rate. Total demand for money -The sum of the transactions demand for money and the asset demand for money Open- market operations - The buying and selling of US government securities by the Federal Reserve Banks for purposes of carrying out monetary policy Reserve ratio - The fraction of checkable deposits that a banks must hold as reserves in a Federal Reserve Bank or in its own bank vault; also called the
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Unformatted text preview: reserve requirement Discount rate-The interest rate that the Federal Reserve Banks charge on the loans they make to commercial banks and thrift institutions Term auction facility- The monetary policy procedure used by the Federal Reserve , in which commercial banks anonymously bid to obtain loans being made available by the Fed as a way to expand reserves in the banking system. Federal funds rates- The interest rate banks and other depository institutions charge one anotheron overnight loans made out of their excess reserves Expansionary monetary policy- Federal Prime interest rate-The benchmark interest rate that banks use as a reference point for a wide range of loans to businesses and individuals. Restrictive monetary policy-Federal reserve system actions to reduce the money supply , increase interest rates , and reduce inflation ; a tight money policy. Taylor rule-Cylindrical symmetry-Mortgage debt crisis-...
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This note was uploaded on 10/01/2010 for the course ECO 2013 taught by Professor Haroldj.vanboven during the Fall '09 term at Edison State College.

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CHAPTER 32 OUTLINE - reserve requirement Discount rate-The interest rate that the Federal Reserve Banks charge on the loans they make to commercial

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