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monetary policy
A central bank’s changing of the money supply to influence interest rates and assist the economy in achieving a full-employment noninflationary level of total output.
open-market operations
The buying and selling of U.S. government securities by the Federal Reserve Banks for purposes of carrying out monetary policy.
reserve ratio
The "specified percentage" of its deposit liabilities that a commercial bank must keep as reserves.
discount rate
The interest rate which the Federal Reserve Banks charge on the loans they make to commercial banks and thrift institutions.
easy money policy
Federal Reserve System actions to increase the money supply to lower interest rates and expand real GDP.
tight money policy
Federal Reserve System actions which contract or restrict the growth of the nation’s money supply for the purpose of reducing or eliminating inflation.
velocity of money
The number of times per year the average dollar is spent on final goods and services.
prime interest rate
The interest rate banks charge their most creditworthy borrowers for example large corporations with excellent financing credentials.
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