Term
| What happens to the Money Supply when the FED buys bonds from the public |
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Definition
| the Money Supply is increased |
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Term
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Definition
| deposits that a bank keeps as cash in its vault or on deposit with the federal reserve |
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Term
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Definition
| reserves that a bank is legally required to hold, based on its checking account deposits |
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Term
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Definition
| the minimum fraction of deposits banks are required by law to keep as reserves |
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Term
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Definition
| reserves that banks hold over and above the legal requirement |
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Term
| How does the bank increase the money supply |
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Definition
| by giving out consumer loans to homes or commercial loans to companies. |
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Term
| Simple Deposits Multiplier |
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Definition
| ratio of the amount of deposits created by banks to the amount of new reserves. |
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Term
| Three monetary tools used by Feds |
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Definition
Open Market Operations
Discount Policy
Reserve Requirements |
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Term
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Definition
| the buying and selling of treasury securities by the Federal Reserve in order to control the money supply |
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Term
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Definition
banks receiving loans from the FED increases money supply
lowering the discount rate results in banks taking more loans |
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Term
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Definition
| loans the fed makes to banks |
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Term
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Definition
| interest rate it charges on the loans |
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Term
| what effect do reserve requirements |
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Definition
| reducing the RR increases the amount of money banks can loan out resulting in increased money supply |
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