Identify at Least Three Effects That Could Result When the Central

question 13

Essay

Identify at least three effects that could result when the central bank changes its balance sheet that can impact the economy.

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Definitions:

Loans

Sums of money borrowed that are expected to be paid back with interest by the borrower over a specified period of time.

Discount Rate

The interest rate charged by central banks on loans they give to commercial banks and other financial institutions.

Fed

The Federal Reserve System, which is the central banking system of the United States, responsible for monetary policy.

Loans

Money borrowed that is expected to be paid back with interest.