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Terms in this set (41)

1)another tool at the disposal of the government for maintaining the health of the economy is monetary policy, which is ability to regulate them out of money available in the economy.
2)The prices of goods and services are heavily influenced by how much money is available within a society. The more dollars floating around in the economy, the easier they are to come by, and the less each one will buy.
3)the Federal Reserve System is a central banking system of the United States and the vehicle through which the government controls the five money in circulation.
a) The Federal Reserve System consists of 12 regional Federal Reserve banks through which money is distributed to financial institutions and a Federal Reserve board of seven members appointed by this president with the Senate confirmation to stagger terms.
b)the Fed controls the money supply by:
-->setting interest rates for government bonds.
-->buying and selling government bonds and other financial instruments with member banks. Bond purchases from banks put money into the economy; Bond sales to banks reduced the amount of money banks have available to lend.
-->setting the federal funds rate, which requires banks to keep a minimum percentage of deposits on hand in cash. Increasing the reserve rate reduces the money available to lend, or reducing the rate increases the money supply.
-->setting the rates at which banks be borrowed directly from the government and they charge each other for funds.
4)The money supply tiny in two primary ways
a)increasing the amount of money available to banks to sell as long put more money into the economy, which stimulates spending and growth
b)reducing the money supply slows the economy and checks inflation
5)The Fed is charged with modulating the supply of money and economy and regulating banks in order to maintain economic stability in sustainable economic growth