Fiscal Policy : Congress: the President, Tax on Spend.
Monetary Policy: The FED ( Federal Reserve Bank), OMO,
Discount Rate, Federal Fund Rate, Reserve Requirement.
The Federal Fund Rate is the interest rate that commercial banks charge one another for an overnight loan.
-Has an indirect relationship of the Money supply.
Prime Rate is the interest rate that the banks charge their most credit worthy customers.
The Federal Fund Rate is the interest rate that commercial banks charge one another for an overnight loan.
-Has an indirect relationship of the Money supply.
Prime Rate is the interest rate that the banks charge their most credit worthy customers.
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Open Market Operations (OMO)
-Buy or sell securities/bonds
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Expansionary: recession
-Easy money policy
-Buy bonds which increases money supply
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Contractionary: inflation
-Tight money policy
-Sell bonds which decreases money supply
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Discount rate: the interest rate that the FED charges commercial
banks for borrowing money.
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-Decrease
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-Increase
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Reserve Requirement
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-Decrease
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-Increase
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