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What's all the Yellen About? Monetary Policy and the Federal Reserve: CrCo > .2017 Who Controls All of Our Money? - Fusion > .2020 How is Money Created? – Everything We Need to Know - Fusion > .
- they regulate and oversee the nation's commercial banks by making sure that banks have enough money in reserve to avoid bank runs.
- they conduct monetary policy which is increasing or decreasing the money supply to speed up or slow down the overall economy.
2) Interest rate - the price of borrowing money.
a. When interest rates are low, borrowers will find it easier to pay back loans so they will borrow more and spend more. When interest rates are high, borrowers borrow less and spend less.
b. Expansionary monetary policy - when central bank wants to speed up the economy, it will increase the money supply, which will decrease interest rates and lead to more borrowing and spending.
c. Contractionary monetary policy - when central bank wants to slow down the economy, they decrease the money supply. Less money available will increase interest rates and decrease borrowing and spending.
3) Liquid assets - an asset that can be converted into cash quickly and with minimal impact to the price received.
4) Open market operations - this is when the federal reserve buys or sells short term government bonds.
5) Quantitative easing (Q.E.) - when central banks buy longer term assets from banks.
6) Monetary policy - changing money supply to speed up or slow down economy.
Deflation ..
1) The Federal Reserve is the central bank of US. Europe has the European Central Bank.
a. Most Central Banks have two jobs:- they regulate and oversee the nation's commercial banks by making sure that banks have enough money in reserve to avoid bank runs.
- they conduct monetary policy which is increasing or decreasing the money supply to speed up or slow down the overall economy.
2) Interest rate - the price of borrowing money.
a. When interest rates are low, borrowers will find it easier to pay back loans so they will borrow more and spend more. When interest rates are high, borrowers borrow less and spend less.
b. Expansionary monetary policy - when central bank wants to speed up the economy, it will increase the money supply, which will decrease interest rates and lead to more borrowing and spending.
c. Contractionary monetary policy - when central bank wants to slow down the economy, they decrease the money supply. Less money available will increase interest rates and decrease borrowing and spending.
3) Liquid assets - an asset that can be converted into cash quickly and with minimal impact to the price received.
4) Open market operations - this is when the federal reserve buys or sells short term government bonds.
5) Quantitative easing (Q.E.) - when central banks buy longer term assets from banks.
6) Monetary policy - changing money supply to speed up or slow down economy.
