AP Macroeconomics

Advanced Placement Macroeconomics studying national and global economic systems.

Advanced Topics

Monetary Policy and Central Banking

Central banks, like the Federal Reserve in the US, manage a nation's money supply and interest rates to promote economic stability and growth.

Open Market Operations: Buying or selling government bonds to adjust the money supply.
Discount Rate: The interest rate charged to commercial banks for borrowing funds.
Reserve Requirements: The fraction of deposits that banks must hold in reserve.

Expansionary policies increase money supply and lower interest rates to stimulate borrowing and spending.
Contractionary policies reduce money supply and raise interest rates to cool off inflation.

Monetary policy affects everything from mortgage rates to business loans, shaping economic activity across the nation.

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The Federal Reserve cuts interest rates during a recession to encourage consumer spending.
Raising reserve requirements to control inflation in a booming economy.

Central banks use monetary policy to influence money supply, interest rates, and overall economic activity.

Open Market Operations

The buying and selling of government securities by a central bank to control the money supply.

Discount Rate

The interest rate charged by central banks on loans to commercial banks.

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