Posts Tagged Home Loan
Bond Fundamentals – Monetary Policy and Fiscal Policy
It’s the Federal Reserve Bank that influences the money supply. Three tools are used to implement monetary policy:
- Open Market Operations
- Discount Rates
- Reserve Requirements
Since open market operations is the tool used most, we will cover it. Here’s how it works: When the economy is growing too fast and the Fed is worried about the inflation rate, it will sell government securities from its portfolio to the open market. This decreases bank reserves, which means the money supply decreases. When there are less bank and businesses have to pay the bank more in order to borrow. This discourages consumers and businesses from borrowing. Less borrowing means less spending, which slows the economy and eventually can reduce price pressures.
Tags: bond fund, borrow money, Business, economic, economy, Employment, fiscal, fiscal policy, government, Home Loan, Home Loans, Import, inflation, inflation rate, interest rate, interest rates, investment, Loans, market, monetary, monetary policy, money, money supplyRelated posts
Bond Fundamentals – Monetary Policy and Fiscal Policy
It’s the Federal Reserve Bank that influences the money supply. Three tools are used to implement monetary policy:
- Open Market Operations
- Discount Rates
- Reserve Requirements
Since open market operations is the tool used most, we will cover it. Here’s how it works: When the economy is growing too fast and the Fed is worried about the inflation rate, it will sell government securities from its portfolio to the open market. This decreases bank reserves, which means the money supply decreases. When there are less bank and businesses have to pay the bank more in order to borrow. This discourages consumers and businesses from borrowing. Less borrowing means less spending, which slows the economy and eventually can reduce price pressures.
Tags: bond fund, borrow money, Business, economic, economy, Employment, fiscal, fiscal policy, government, Home Loan, Home Loans, Import, inflation, inflation rate, interest rate, interest rates, investment, Loans, market, monetary, monetary policy, money, money supplyRelated posts
