Expansionary/Contractionary Policy and the Multiplier Effect

Either monetary or fiscal policy that is enacted to slow economic growth (as measured by the GDP growth rate).

The rate the Fed charges member banks for short-term loans to meet temporary liquidity needs.

Either monetary or fiscal policy that is enacted to stimulate economic growth (as measured by the GDP growth rate).

The rate that Fed member banks charge other member banks for overnight loans— typically made to meet reserve requirements.

Typically policy set by a central banking authority, whereby money supply access and the resulting cost or access to money (interest rate) is varied to assist in stabilizing economic activity.

The increase in the money supply resulting from the ability of banks to loan deposits; the value is equal to the reciprocal of the prevailing reserve ratio or 1/R, where R is the reserve ratio.

One of the mechanisms available to the Fed to regulate interest rates and the money supply; open market operations refer to the purchase and sale of U.S. Treasury securities.

The required amount of depository liabilities as set by the Fed that a bank must hold, typically quoted as a percentage.

A portion of deposits required to be held by a bank; reserves usually are kept to maintain reserve requirements, as set by the Fed.