Aug 25 2007

Monetary policy doing what it’s meant to do – the Discount Rate

Published by at 10:51 pm under AD/AS Model,Monetary Policy,Money Market

Bank borrowing from the Fed surges in Aug. 22 week – Aug. 23, 2007

IB students, you should now be able to read this article and know exactly what it’s talking about! AP students, hopefully you’ll be able to come back to this one in a few months and get it too. Monetary policy is a tool used by a country’s central bank in which the supply of money in circulation in the economy is increased or decreased in order to stimulate or slow down economic growth. In the US last week, the Fed, America’s central bank, employed one one of the three tools of monetary policy with a particular goal in mind. After reading the article, discuss which of the three tools of Monetary policy were used, and what you think the Fed’s likely goal was.

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