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'''Monetary policy''' is policy enacted by a [[government]] or government agency with the aim of controlling the [[money supply]].
[[Federal Reserve Bank]] actions to influence the availability and cost of [[money]] and [[credit]] as a means of helping to [[unemployment|promote high employment]], [[economic growth]], price stability, and a sustainable pattern of [[international]] transactions.
In the United States, monetary policy is made by the [[Federal Reserve Bank]] and operates using three main tools:
In the United States, monetary policy is made by the [[Federal Reserve Bank]] and operates using three main tools:
==The Reserve Ratio==
==The Reserve Ratio==
The '''[[reserve ratio]]''' is the ratio of money deposited in a bank that the bank is required to keep on hand. This amount of reserves is to ensure that banks can meet withdrawal demand and also prevents banks from becoming too leveraged.
The '''[[reserve ratio]]''' is the ratio of money deposited in a [[bank]] that the bank is required to keep on hand. This amount of reserves is to ensure that banks can meet [[bank run|withdrawal demand]] and also prevents banks from becoming too leveraged.
==The Discount Rate==
==The Discount Rate==
==Open-Market Operations==
==Open-Market Operations==
The Fed's open-market committee can buy or sell Treasury Bonds to cause money to flow toward or away from the government. These sales or purchases are known as [[open-market operations]].
The Fed's open-market committee can buy or sell [[Treasury Bonds]] to cause money to flow toward or away from the government. These sales or purchases are known as [[open-market operations]].
==Sources==
==Sources==