economics quiz review - Quiz Review Monetary Policy actions...

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Quiz Review Monetary Policy – actions of the Fed. o The goals are full employment, stable prices, and sustainable economic growth Discount rate – the interest charged by the Fed to banks that borrow overnight Federal Funds Rate – market-based interest rate which banks charge each other over night on reserve balances held at Fed. Reserve Requirement – amount of money banks keep on reserve at the Fed Open Market Operations – buying/selling U.S. Treasury bonds (most important tool) o The federal reserve is the central bank of the U.S. Its purpose is to ensure a stable economy for the nation They conduct the nation’s monetary policy Monetary policy – policy changes affect the nation’s supply of money Actions have real short and long-term effects They supervise and regulate banking institutions Promote safety and soundness of banking system Ensure compliance with laws and regulation Oversee international banking
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