What is the policy of money?
Monetary policy is a set of tools that a country’s central bank uses to control the amount of money in circulation and encourage economic growth. These tools include changing interest rates and the amount of money that banks need to keep on hand as reserves.
In the United States, the Federal Reserve Bank is in charge of monetary policy. It has two goals: to get as many people working as possible and to keep inflation in check.
KEY TAKEAWAYS
Monetary policy is a set of steps that a country takes to control the amount of money in circulation and promote economic growth.
Strategies for monetary policy include changing interest rates and the amount of bank reserves that are needed.
People usually say that monetary policy is either expansionary or contractionary.
For monetary policy, the Federal Reserve usually uses three methods: reserve requirements, the discount rate, and open market operations.
Learn about monetary policy.
Monetary policy is the process of controlling the amount of money in an economy and the ways that new money comes in.
Monetary policy strategy is affected by things like the gross domestic product (GDP), the rate of inflation, and the growth rates of different industries and sectors.