| Term | Definition |
|---|
| regulates banks to ensure they follow federal laws intended to promote safe and sound banking | what is one of the three functions of the Fed |
| acts as a banker's bank, making loans to banks and as a lender of last resort | what is one of the three funtion of the Fed |
| conducts monetary policy by contolling the money supply | what is one of the three funtion of the Fed |
| Federal Open Market Committee (FOMC) | serves as the main policy-making organ of the Federal Reserve System |
| Federal Open Market Committee (FOMC) | meets appproximately every six weeks to review the economy |
| money supply | refers to the quantity of money available in the economy |
| monetary policy | is the setting of the money supply by policymakers in the central bank |
| open-market operation | primary way in which the Fed changes the money supply |
| open market operaton | buy or sell bonds; buys to increase supply and sell to decrease |
| reserves | are deposits that banks have received but have not loaned out |
| fractional-reserve banking system | banks hold a fraction of the money deposited as reserves and lend out the rest |
| money multiplier | is the amount of money the banking system generates with each dollar of reserves |
| discount rate | is the interst rate the Fed charges banks for loans |
| the money supply increases | when a bank makes a loan from its reserves |
| is affected by the amount deposited in banks and the amount that banks loan | the money supply |
| both assets and liabilities | the money supply is |
| the money is generally deposited into another bank which creates MORE deposits and MORE reserves to be lent out | when one bank loans money, |
| the money supply increases | when a bank makes a loan from its reserves |
| decreases the money supply | increasing the reserve requirement |
| increases the money supply | decreasng the reserve requirement |
| decreases the money supply | increasing the discount rate |
| increases the money supply | decreasing the discount rate |
Combine with other sets
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