Monetary Policy Is Easy If the Central Bank Sticks to a Few

question 240

True/False

Monetary policy is easy if the central bank sticks to a few simple rules of thumb.

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Definitions:

Reserve Requirement

Central bank regulations that set the minimum amount of reserves that must be held by a commercial bank.

Bonds

Financial instruments issued by governments or corporations to raise funds, representing a loan made by the investor to the issuer.

Money Supply

The combined economic financial resources at a given time in an economy.

Interest Rate

The part of a loan that is added as interest for the borrower, normally expressed as an annual percentage of the existing loan balance.