Monetary Policy

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is the basis of banking today and originated with the goldsmiths in the middle ages.

Fractional Reserve Banking
The minnimum balance that the Fed requires a bank to hold in vault cash or on deposit with the Fed is called

The Required Reserves
The percentage of deposits held as required reserves is called the

required reserves ratio
allows a bank to create money by exchanging loans for deposits

excess reserves
is the maximum change in checkable deposits due to a change in excess reserves

Money multiplier
Action taken by the Fed to change the money supply is called

Monetary policy
are the buying and selling of government securities by the Fed through its trading desk at the New York Fed

Open market operations
Changes in the ________ occur when the Fed changes the rate of interest it charges on loans of reserves to banks

Discount rate
is a private market in which banks lend reserves to each other for less than 24 hours.

Federal funds market
The interest rate banks charge for overnight loans of reserves to other banks is called

Federal funds rate