Monetary Policy

I. Introduction In order to promote national economic goals, a central bank acts to influence the availability and cost of money and credit, this is known as monetary policy. The Fed has three main tools with which to carry out policy. These instruments of monetary policy are open market operations, discount policy and reserve requirements. Open market operations are the Fed’s most important tool. It causes a change in the monetary base. When banks …showed first 75 words of 791 total…

…showed last 75 words of 791 total…sector to get that extra spending money in their pockets. When they do, look for spending to increase along with the interest rate to combat inflation. Once consumers begin to spend more, the business sector will again flourish and employment is expected to rise again. With the rise of interest rates also look for investment activity to rise. It may take a while, but the United States will again experience economic growth. Bibliography ------------------------------------------------------------------------ **Bibliography**