by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Open Market Operations? The most common monetary policy tool in the U.S. is open market operations.These take place when the central bank sells or buys U.S. Treasury bonds in order to influence the quantity of bank reserves and the level of interest rates....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Loose Monetary Policy? Loose monetary policy aims to stimulate an economy by lowering interest rates. What is Tight Monetary Policy? Tight monetary policy aims to slow down an overheated economy by increasing interest rates. Factors of Monetary Policy The...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Financial Intermediary? An “intermediary” is one who stands between two other parties. Banks are a financial intermediary—that is, an institution that operates between a saver who deposits money in a bank and a borrower who receives a loan from that bank....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Quantity Theory of Money? According to the quantity theory of money, the general price level of goods and services is proportional to the money supply in an economy. What is the Equation for the Quantity Theory of Money? American economist Irving Fisher...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Money Multiplier Formula? In a system with multiple banks, Singleton Bank deposited the initial excess reserve amount that it decided to lend to...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the IS-LM Model? The IS-LM model, which stands for “investment-saving” (IS) and “liquidity preference-money supply” (LM) is a Keynesian model that shows how the market for economic goods (IS) interacts with the loanable funds market (LM) or money market. It...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Aggregate Expenditure Model? The aggregate expenditure model relates the components of spending (consumption, investment, government purchases, and net exports) to the level of economic activity. In the short run, taking the price level as fixed, the level...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is a Money Capital Market? The money market is the trade in short-term debt. It is a constant flow of cash between governments, corporations, banks, and financial institutions, borrowing and lending for a term as short as overnight and no longer than a year. The...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Savings Deposits? A savings deposit, otherwise known as a passbook savings account, a statement savings account, or as a money market deposit account, is a deposit or account which, under the terms of the deposit contract or by practice of the depository...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Commodity Money? Commodity money is that has value because it is made of a particular commodity that has value itself. In other words, commodity money is the same a valuable object (an object with intrinsic value) in addition to the value it has in an...
