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Business
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| Number of pages / Number of words: |
3 / 667 |
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The interest rate is the amount the FED charges private banks, so they can meet the reserve requirements. The prime rate is currently set at 5%. If the Interest rate is low, the banks will borrow more money from the FED and the money supply will increase. Interest rates have been above average for the past 20 years, but are currently considered low...
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Interest rates have been above average for the past 20 years, but are currently considered low. Open Market Operations is the most effective and most used daily. An OMO is the Fed's purchase or selling of bonds. When the Fed buys bonds on the OMO money is deposited into banks; this gives banks excess reserves to loan, which increases the money supply...
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