l016 soc

Cards (16)

Monetary policy 
The control over the money supply
Monetary policy tools
Reserve Requirement
Discount Rate
Open Market Operation
Reserve Requirement
Private loaning
Discount Rate
Bank loaning
Open Market Operation
1. Government loaning
2. Buying and selling of bonds
Money supply changes 
Affects the circulation
Money supply 
The quantity of money available in an economy
Discount Rate 
Affects money supply, interest rate, aggregate demand
Buying bonds
Increases money supply
Selling bonds
Decreases money supply
Monetary expansion/stimulus
Decreases reserve requirement, decreases discount rate, buys bonds
Monetary contraction/restraint
Increases reserve requirement, increases discount rate, sells bonds
Liquidity trap is a situation when expansionary monetary policy (increase in money supply) does not increase the interest rate
Monetary policy has short-term vs long-term effects, time lags, and inefficiencies
Monetary policy 
The control over the money supply is called
The money supply  
the quantity of money available in an economy