Monetary and Fiscal Policy Overview

Monetary Policy

Management of money supply by central banks.

Contractionary Policy

Higher interest rates reduce lending and spending.

Expansionary Policy

Lower interest rates increase lending and spending.

Financial Institutions

Establishments facilitating monetary transactions.

Banks

Entities lending funds from deposits.

Bangko Sentral ng Pilipinas

Central bank maintaining price stability and growth.

Fiat Money Authority

Central bank's power to issue currency.

Reserve Requirement

Percentage of deposits banks must hold in reserve.

Open Market Operation

Buying/selling government securities to control money supply.

Moral Suasion

Influencing banks' behavior through guidance.

Rediscount Rate

Interest rate charged to commercial banks for loans.

Types of Banks

Categories include savings, trust, commercial, and rural.

Fiscal Policy

Government's use of taxation and spending.

Tax

Revenue collected from citizens for government use.

National Budget

Allocations for government departments' expenditures.

Contractionary Fiscal Policy

Decrease spending and increase taxes.

Expansionary Fiscal Policy

Increase spending and lower taxes.

Industrial Sector

Processes raw materials into industrial goods.

Service Sector

Produces intangible outputs affecting products or people.

Agriculture Sector

Involves soil cultivation, crop harvesting, and livestock.