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The Federal Reserve
U.S. Central Bank; Purpose: to control the supply of credit and money to achieve stable prices, full employment, economic growth.
Open Market Operations
The buying and selling of Treasury Securities (Bonds) by the Federal Reserve in order to control the money supply
the actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy
Expansionary Monetary Policy
Federal Reserve system actions to increase the money supply, lower interest rates, and expand real GDP; an easy money policy = Buying Bonds, Lowering the Discount Rate and Reserve Requirement
Contractionary Monetary Policy
Contracting the supply of money and increasing interest rates to decrease Aggregate Demand and ultimately decrease inflation = Selling Bonds, Raising the Discount Rate and Reserve Requirement
1 / reserve requirement: the multiple by which the money supply will change because of a change in bank reserves
taxes that require all income groups to pay the same percentage of their income in taxes
the demand for all goods and services by all households, business, governments, and foreigners
The total amount of goods and services in the economy available at all possible price levels.
a benefit received by someone who had nothing to do with the activity that generated the benefit
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