Chapter 16: Federal Reserve & Monetary Policy – Flashcards
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Board of Governors
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The seven member board that oversees the Federal Reserve System (Fed)
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Monetary Policy
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The actions the Fed takes to control the money supply and the rate of inflation in the economy
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Federal Reserve District
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12 banking districts created by the Federal Reserve Act
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Check Clearing
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Process which banks record whose account gives up money and whose account receives money when a customer writes a check
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Discount Rate
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Rate the Fed charges for loans to commercial banks
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Prime Rate
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Rate of interest banks charge on short term loans to their best customers (usually large companies with good credit)
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Open Market Operations
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Buying & selling government securities to change the supply of money
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Easy Money Policy
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Monetary policy that increases the money supply (occurs when the Fed wants to expand/stimulate the economy)
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Tight Money Policy
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Monetary policy that reduces the money supply (occurs when the Fed wants to decrease economic growth or prevent hyperinflation)
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Baby Boomers
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The 78 million people born during the after World War II until the early 1960s
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Currency
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Money
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Interest Rate
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The percentage for an amount of money charged for its use
