Econ Chpt 16 Vocab

  1. Board of Governors
    The seven-member board that oversees the federal reserve system.
  2. Monetary policy
    The actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy.
  3. Federal Reserve Districts
    The twelve banking districts created by the Federal Reserve Act.
  4. Federal Advisory Council (FAC)
    The research arm of the Federal Reserve.
  5. Federal Open Market Committee (FOMC)
    Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money supply.
  6. Check Clearing
    The process by which banks record whose account gives up money and whose account receives money when a customer writes a check.
  7. Bank Holding Company
    A ompany that owns more than one bank.
  8. Federal Funds Rate
    Interest rate banks charge each other for loans.
  9. Discount Rate
    Rate the Federal Reserve charges for loans to commercial banks.
  10. Net Worth
    Total assets minus total liabilities.
  11. Money Creation
    The process by which money enters into circulation.
  12. Required Reserve Ratio (RRR)
    Ratio of reserves to deposits required of banks by the Federal Reserve.
  13. Money Multiplier Formula
    Amount of new money that will be created with each demand deposit, calculated as 1 divided by RRR.
  14. Excess Reserves
    Reserves greater than the required amounts.
  15. Prime Rate
    Rate of interest banks charge on short-term loans to their best customers.
  16. Open Market Operations
    The buying and selling of government securities to alter the supply of money.
  17. Monetarism
    The belief that the money supply is the most important factor in macroeconomic performance.
  18. Easy Money Policy
    Monetary policy that increases the money supply.
  19. Tight Money Policy
    Monetary policy that reduces the money supply.
  20. Inside Lag
    Delay in implementing monetary policy.
  21. Outside Lag
    The time it takes for monetary policy to have an effect.
Card Set
Econ Chpt 16 Vocab
Words and defs for Econ chpt 16 vocab quiz.