Unit 4 - Mar 17 (Monetary Money)

Monetary Policy - controlled by the Fed (Federal Reserve Bank)

• Influencing the economy through changing and reserve which influence the money supply and available credit.
• Banker's bank.

4 Options of  Monetary Policy

1. Reserve Requirement - % that set by the Fed of the minimum reserve a bank must have.
2. Discount Rate - banks borrow money from the Federal Reserve (last resort).
3. Federal Fund Rate - bank loan each other overnight funds.
4. OMO (Open Market Operation) - security/bonds. Fed doings (sells/buys) 
• Reserve Requirement, Discount Rate, Federal Fund Rate - Decrease : Expansionary Monetary Policy.             Increase : Contractionary Monetary Policy.