The Federal Open Market Committee / Interest Rates

why is this policy checked routinely?

ensure that the supply of money within the economy is neither too large (causing prices to increase) nor too small (causing prices to decreases

Federal Open Market Committee

included in the Federal Reserve - responsible for implementing monetary policy. Has 12-voting members that meet 8 times a year to decide the course of action that the Fed should take to control the money supply.

how does increased money supply/decreased interest rate affect central banks?

monetary policy makes it more attractive to borrow and spend money

how does decreased money supply/increased interest rate affect central banks?

monetary policy makes it more attractive to deposit funds and reduce borrowing from the central bank

who helps the central bank manipulate money supply?

retail banks (the first financial institutions to expose money to the economy)

how do retail banks help the central bank

retail banks adjust interest rates on lending/borrowing and gives the central bank an opportunity to regulate the supply of money to individuals and companies

who is responsible for determining interest rates in the united states?

the federal open market committee

who creates the policy that helps ensure stable prices and liquidity for a country

the government's economic observers

how is interest rate increased?

when monetary policy makers wish to decrease the money supply