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abjones.92
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What do Central Banks do?
Changes the money supply and interest rates, aiming for an inflation control target that will achieve steady growth, full employment and stable prices
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Monetary Policy
changing the supply of money and interest rates to achieve steady growth, full employment and price stability
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Price Stability
When inflation rates are low enough to not influence peoples decisions
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Inflation-control Target
range of inflation rates set a as a target by central bank as monetary policy objective
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What percent does monetary policy aim for?
2 percent range measured by CPI
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Overnight rate
interest rate banks charge each other for one day loans, they then determine all other interest rates
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What does lower/higher interest rates mean?
Lower means more borrowing and spending with less saving, Higher means less borrowing and spending and more saving.
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Are the interest rates high or low in a recessionary gap?
They are lower to increase borrowers
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Open market operations
Buying and selling of government bonds on bond market
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Prime rate
Interest rate on loans to lowest risk corporate borrowers
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Quantitive Easing
flooding financial systems with money by buying risky bonds, mortgages and assets from banks.
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