Unit 2 - Federal Reserve & Economy Study Guide

Vocabulary flashcards covering key terms, concepts, economic indicators, and key people regarding the Federal Reserve and economy.

Reserve Requirement (Deposit Usage)

When you make a deposit in the bank, your money is used by the bank for its other services, including loans.

Monetary Policy

Determines the size and rate of growth of money supply.

Fiscal Policy

Government spending policies.

Beige Book

A public repost posted 8 times a year by the US Federal reserve bank that summarizes current economic conditions across 12 regional fed districts.

FOMC (Federal Open Market Committee)

A committee of 12 members (1 president of the Federal Reserve bank of New York, 7 Members of the board of governors of the federal reserve system, and 4 remaining 11 reserve bank presidents, 1 per year) that holds 8 yearly meetings, 2 weeks after the Beige book is published, to discuss economic and financial conditions, determine the appropriate stance of Monetary policy and assess the risk to lung-run goals of financial stability and sustainable economic growth.

Expansionary Monetary Policy

Increases money supply, will stimulate the economy during depression.

Contractionary Monetary Policy

Decrease money supply, slow down economic growth during prosperity.

Discount Rate

The interest rate that banks pay to the Federal reserve for borrowing money. Increases = discourages, decreases = incourages.

Federal Funds Rate

The interest rate at which banks lend money to one another overnight.

Reserve Requirement (Percentage)

The percentage of a bank's deposit that it must hold on to as set by the Federal reserve.

Open Market Operations

Sells bonds and securities in the stock market to control money supply. Selling = decreasing the money supply, and by Buying = increasing the money supply.

Reason for FED Creation

To stop financial panics and bring stability to the American banking system.

FED District Banks

12, Separated by districts, New York always votes.

Goals of the FED

The Federal reserve works to promote a strong U.S economy, regulates banks.

Consumer Price Index

The average change over time in prices that consumers pay for goods and services.

Gross Domestic Product

The overall value of the goods and services an economy produces.

Consumer Confidence

How optimistic or pessimistic consumers feel about the overall economy and their personal finance prospects.

Jobless Claims Report

Weekly published report of how many workers are applying to state unemployment insurance.

Retail Sales Report

Measures the total combined revenue of retail and food service stores.

Henry Paulson

Secretary of the treasury during the 2008 financial crisis.

Ben Bernanke

Chairman of the FED during the 2008 financial crisis.

Tim Giethner

President of the New York federal reserve bank.

Kevin Warsh

Current chairman of the FED.