Central Bank operations
The primary entity responsible for controlling the money supply and interest rates.
What is the Central Bank?
This tool involves the purchase and sale of government bonds and treasury bills
What are Open Market Operations?
The requirement for commercial banks to keep a portion of deposits in the Central Bank interest-free
What is the Mandatory Reserve?
A type of policy that focuses on keeping the money supply at a fixed level.
What is Tight Monetary Policy?
The final intended result of the credit policy transmission mechanism
What is GDP growth?
One of the four main goals of monetary policy aimed at maintaining the value of the currency
What is price level stability?
The degree of impact that changing the mandatory reserve ratio has on the economy.
What is "Strong"?
The formula rr = R/D represents this specific indicator
What is the Reserve factor (ratio of reserves to deposits)?
A policy type characterized by maintaining the interest rate at a certain level.
What is Soft Monetary Policy?
The market where changes in money supply directly impact interest rates.
What is the Money Market?
The specific market where the Central Bank controls the exchange rate of the national monetary unit
What is the foreign exchange market?
The interest rate at which the Central Bank provides loans to commercial banks
What is the Account Interest Rate?
If the reserve ratio (rr) increases, this happens to the money multiplier (m)
What is "It decreases"?
The general direction of policy intended to stimulate economic activity.
What is Encouraging (Expansionary) policy?
The market where interest rate changes lead to shifts in total costs and demand.
What is the Commodity Market?
The Central Bank's goal regarding the balance of payments in an economy
What is providing a balance of payments?
These specific short-term assets are traded during open market operations.
What are government treasury bills (or short-term obligations)?
The formula cr = C/D defines this ratio.
What is the Deposition Coefficient (cash to deposits ratio)?
The policy direction intended to cool down the economy.
What is Reducing (Contractionary) policy?
According to the Ad formula, these four components make up aggregate demand.
What are Consumption (C), Investment (I), Government Spending (G), and Net Exports (Xn)?
The target resource status that monetary policy aims to provide for stable growth.
What is full employment of resources?
The degree of impact associated with open market operations according to the provided impact scale.
What is "Average (Moderate)"?
This is calculated by subtracting required reserves from total reserves.
What are Excess Reserves (R_{ort})?
In a "Soft" monetary policy graph, this variable (M) increases to keep the interest rate (R) stable
What is the Money Supply?
The specific variable that changes in the commodity market as a result of interest rate changes.
What are Total Costs (or Investment/\Delta I)?