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21 Cards in this Set
- Front
- Back
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board of governors
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the seven member board that oversees the federal reserve system
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monetary policy
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the actions the federal reserve takes to influence the level of real GDP and the rate of inflation in the economy
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federal reserve districts
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the 12 banking districts created by the federal reserve act
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federal advisory council FAC
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the research arm of the federal reserve
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federal open market committee FOMC
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federal reserve committee that makes key decisions about interest rates and the growth of the united of the untied states money supply
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check clearing
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the process by which banks record whose account gives up money and whose account receives money when a customer writes a check
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bank holding
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a company that owns more than one bank
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federal funds rate
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interest rate banks charge each other for loans
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discount rate
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rate the federal reserve charges for loans to commercial banks
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net worth
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total assets minus total liabilities
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money creation
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the process by which money enters into circulation
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required reserve ratio RRR
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ratio of reserves to deposits required of banks by the federal reserve
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money multiplier formula
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amount of new money that will be created with each demand deposit calculated as 1 divided by RRR
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excess reserves
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reserves greater than the required amounts
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prime rate
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rate of interest banks charge on short term loans to their best customers
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open market operations
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the buying and selling of government securities to alter the supply of money
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monetarism
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the belief that the money supply is the most important factor in macroeconomics performance
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easy money policy
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monetary policy that increases the money supply
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tight money policy
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monetary policy that reduces the money supply
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inside lag
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delay in implementing monetary policy
causes: 1.takes time to identify problems 2.once a problem has been recognized, it can take additional time to enact policies |
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outside lag
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the time it takes for monetary policy to have an effect
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