ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Central banks in many advanced economies set explicit inflation targets. Many developing countries also are moving to inflation targeting. Central banks conduct monetary policy by adjusting the supply of money, usually through buying or selling securities in the open market.

Detailed explanation-2: -The Fed controls the supply of money by increas-ing or decreasing the monetary base. The monetary base is related to the size of the Fed’s balance sheet; specifically, it is currency in circulation plus the deposit balances that depository institutions hold with the Federal Reserve.

Detailed explanation-3: -The FOMC changes monetary policy primarily by raising or lowering its target for the federal funds rate, the interest rate for overnight borrowing between banks. Lowering the target rate represents an “easing” of monetary policy, while increasing the target rate is a “tightening” of policy.

Detailed explanation-4: -The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system.

Detailed explanation-5: -Open Market Operations. Discount Window and Discount Rate. Reserve Requirements. Interest on Reserve Balances. Overnight Reverse Repurchase Agreement Facility. Term Deposit Facility. Central Bank Liquidity Swaps. More items •16-Dec-2021