Monetary Policy

Written By Jonathan Milner

Definition

Monetary policy is a set of actions available to a nation's central bank (federal reserve) to achieve sustainable economic growth by adjusting the money supply. Monetary policy in the United States comprises the Federal Reserve's actions and communications to promote maximum employment, stable prices, and moderate long-term interest rates--the economic goals the Congress has instructed the Federal Reserve to pursue. Monetary policy influences how much you have to pay to borrow and how much interest you receive on your savings. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy. The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements.

Example

 
 

Questions

  1. What is monetary policy?

  2. Who sets monetary policy?

  3. What does monetary policy effect?

  4. How does monetary policy effect you?

  5. What emoji would do a good job of expressing the concept of monetary policy?

  6. How much control do presidents have over monetary policy?

  7. How much impact does monetary policy have over a president’s popularity?

  8. What is the difference between fiscal policy and monetary policy?

Remember!

Now, let’s commit this term to our long-term memory. On a scrap piece of paper, take 10 or 20 seconds to draw monetary policy! Draw with symbols or stick figures if you wish. Nothing fancy. Don’t expect a masterpiece. No one else will see this but you. Look at your drawing. That’s all - now it’s downloaded into your memory. Destroy the piece of paper in a most delightful way.

Further Review

GoPo Glossary

Jonathan Milner

Civics Maven!

https://www.gopopro.com/
Previous

Fiscal Policy
Next

Primary election