Business Finance - Unit 5 Vocab

Monetary Policy

Management of the money supply for the purpose of maintaining stable prices, full employment, and economic growth

Board of Governers

Controlling body of the Federal Reserve, whose members are appointed by the president of the United States

District Bank

One of the 12 banks that compose the Federal Reserve

Federal Open Market Committee (FOMC)

Part of the Federal Reserve that establishes and executes monetary policy

Federal Funds Market

Market in which banks borrow and lend excess reserves

Federal Funds Rate

Interest rate charged by banks on overnight loans of reserve

Discount Rate

Interest rate charged banks for borrowing reserves from the Federal Reserve

Open Market Operations

Buying and selling of U.S Treasury securities by the Federal Reserve

Fiscal Policy

Taxation, expenditures, and debt-management by the federal government

Deficit

Disbursements exceeding receipts

Surplus

Receipts exceeding disbursements

Inflation

General increase in prices with special emphasis on increases in consumer prices

Deflation

General decline in prices

Recession

Period of at least six months during which the economy experiences increased unemployment and negative growth (GDP)