Chapter 16 Vocab>

1. The fed- (federal reserve system) jobs range from processing checks to serving as the governments banker.
2. monetary policy-involves changing the rate of growth of the supply of money in circulation to affect the amount of credit and, therefore, business activity in the economy.
3. loose money policy-, credit is inexspencive to borrow and abundant.
4. tight money policy- credit is expensive to borrow and in short supply.
5. fractional reserve banking- the banking system in which US banking is.
6. reserve requirements- requirements set by the Fed in 1913. Bank must hold money in a vault for the Federal Reserve bank.
7. FOMC- meets approximately eight times a year to decide the course of action that the Fed should take to control the money supply.
8. discount rate- the rate of interest the Fed charges.
9. prime rate- the rate it charges its best business customers.
10. check clearing- is the method by which a check that has been deposited in one depository institution is transferred to the depository institution on which it was written.
11. open market operations- buying and selling US securities.