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Macroeconomics Chapter 12 Vocabulary

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Terms in this set (10)
Credit Controls
A seldom used Fed control device but they have the authority to dictate any interest rate of terms of any loan.
Discount Rate
The interest rate paid by a commercial bank if it borrows from the Federal Reserve.
Easy Money Policy
If the Fed makes more money available (M1) for lending, usually in response to recessionary pressure, it is called easy money.
Equations of Exchange
This equations (MV=PQ) is a way of analyzing, not only the growth of the money supply, but also the speed at which money is turning over in our economy and the effects that follow.
Federal Funds Rate
The rate that banks charge each other for short-term (usually overnight) loans. Prime Rate: The interest rate banks charge their best (usually corporate) customers. It is the benchmark for most other loans.
Keynesian Theory
Sometimes called Neo-Keynesian economics, this school of thought is based on the aggregate demand-aggregate supply theory first developed by John Maynard Keynes. It sees the control of the money supply of secondary importance to Fiscal Policy. Keynesians are typically associated with a more liberal political viewpoint.
Margin Requirement
The amount of down payment required when you buy stock. Currently 50% of the total purchase must be paid when you complete the transaction.
Monetarist Theory
One of the major schools of contemporary economics which asserts that controlling the money supply is the key to maintaining a stable economy. Monetarists are usually associated to a more conservative political viewpoint.
Monetary Policy
Actions taken by the Federal Reserve to influence the availability and cost of bank credit in order to promote economic stability.
Moral Suasion
The informal influence associated with the importance of the Federal Reserve.