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Goals of Monetary Policy definitions

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  • Monetary Policy
    Management of the nation's money supply by the central bank to achieve economic objectives like stable prices and high employment.
  • Money Supply
    Total amount of liquid currency and deposits available in the economy, commonly measured by M1 and M2.
  • Federal Reserve
    Central banking system of the United States responsible for regulating the money supply and overseeing financial stability.
  • Price Stability
    Condition where inflation is controlled, ensuring money retains its purchasing power over time.
  • Inflation
    General increase in prices, which reduces the purchasing power of money if not kept in check.
  • High Employment
    Economic state where most resources, especially labor, are fully utilized, keeping GDP near its potential.
  • Gross Domestic Product
    Total value of all goods and services produced within a country, reflecting overall economic activity.
  • Stability of Financial Markets
    Condition where financial institutions and markets function smoothly, preventing crises and failures.
  • Lender of Last Resort
    Role of the central bank in providing emergency funds to financial institutions to prevent systemic collapse.
  • Economic Growth
    Sustained increase in a nation's output and income, often driven by investment and efficient resource use.
  • Interest Rate
    Cost of borrowing money, which influences the level of investment and overall economic activity.
  • Investment
    Expenditure by firms on capital goods, influenced by borrowing costs and crucial for expanding productive capacity.
  • Commercial Bank
    Financial institution accepting deposits and making loans, traditionally the main focus of central bank oversight.
  • Investment Bank
    Financial institution involved in securities trading and underwriting, included in central bank actions since 2008.