Reserve Requirement
Open Market Operation
Discount Rates
The RR- The fed sets the amount sets the amount
There is a recession, what should the fed does the reserve requirement
Decrease the reserve ratio
RR decrease MS increase i decrease I increase AD increase
Inflation what should the fed do?
Increase RR
RR increase MS decrease I decrease AD decrease
Open Market Operations is when the fed buys or sells government bonds (securities) this is the most important and widely used montary policy if the Feds buy bonds out of the economy and replaces them with money ms increase. If the fed sells bonds it takes money and gives security to the investor MS increase
The discount rate is the interest rate that fed charges commercial banks for short term loans. The federal fund rate is the interest rate that banks charge one another for overnight loans
Prime rate is the interest rate that banks charge their most credited worthy people
Loanable funds markets
Private sector supply and demand of loans brings together those who want to lend money shows effect R interest rate
Hey Hien, love the simplicity of your blog! Since we are on the topic of money and monetary policy, I was wondering if you thought our policies during a recession or inflation benefit high or low income families more? Is it better to save and invest or consume as much as i can in our current economy? I feel like as a senior in high school, I should start getting used to saving. What do you think?
ReplyDeleteHello Hien,your blog is very easy to understand. I was wondering if the government Only spends money during a recession or do people spend money too. If so, does the government print money or take money from excess reserves and taxes.
ReplyDelete