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- Monetary- of or relating to money or to the mechanisms by which it is supplied to and circulates in the economy.
- I'm Frank I'm with the Federal Reserve and we're in charge of the Monetary Policy
- Fiscal Policy- the use of government spending and taxation to influence the economy
- I'm Bob I'm with the executive and legislative branch and we're in charge of fiscal policy
- Reserve Requirements- the amount of funds that a bank holds in reserve to ensure that it is ableOpen Market Operations- that refers to the purchase and sale of securities in the open market by the Federal Reserve
- Monetary- of or relating to money or to the mechanisms by which it is supplied to and circulates in the economy.
- These are the three main monetary tools
- Interest on Reserves-allows a lender to periodically advance loan funds to pay interest charges on the outstanding balance of the loan.
- Taxes- an amount of money that you have to pay to the government so that it can pay for public services such as roads and schools.
- Fiscal Policy- the use of government spending and taxation to influence the economy
- These are two fiscal policy tools
- Spending- the total money spent on final goods and services by individuals and households for personal use and enjoyment in an economy.
- When interest rates are rising, both businesses and consumers will cut back on spending. interest rate hikes are known as the central bank's one major tool to lower inflation, which it does by raising the cost of borrowing money to curb the demand for goods and services.
- Monetary- of or relating to money or to the mechanisms by which it is supplied to and circulates in the economy.
- If feds increase interest rates have on loans it would mean more expensive borrowing costs
- Fiscal Policy- the use of government spending and taxation to influence the economy
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