What is an example of easy money policy?
Example of Easy Money: The Great Recession
What is an easy money policy? Monetary policy designed to expand the money supply, increase aggregate demand and create jobs. The Fed will lower interest rates at this time. Implemented during recessions.
Monetary policy consists of the steps the central bank of a nation can take in order to regulate the nation's money supply. For instance, a central bank might reduce interest rates during a recession in order to make loans more readily available to other banks and thus stimulate economic recovery.
The rule is "A Player cannot buy more than one Property on the same side of the Board, nor can he have more than one House on a Property UNTIL he first owns 4 Properties, one on each of the FOUR SIDES of the Board."
Economists differentiate among three different types of money: commodity money, fiat money, and bank money. Commodity money is a good whose value serves as the value of money. Gold coins are an example of commodity money. In most countries, commodity money has been replaced with fiat money.
By following tight monetary policy, the government reduced inflation from over 70% in 1998 to 2% in 1999.
(Portable—Money must be easy to carry around; durable—money must be long lasting and withstand wear and tear; divisible—money must be easily divided into small parts so people can purchase goods and services of any price; stable in value—the value of money remains constant over long periods of time; acceptable—whatever ...
In easy money policy, the interest rates are lower, therefore it is easier to borrow, thereby increasing money circulation in the economy. In the tight money policy, the interest rates are higher, therefore it is difficult to borrow and the money circulation will reduce in the economy.
In macroeconomics, an open market operation (OMO) is an activity by a central bank to exchange liquidity in its currency with a bank or a group of banks.
Tools of Monetary Policy
For example, if a central bank increases the discount rate, the cost of borrowing for the banks increases. Subsequently, the banks will increase the interest rate they charge their customers. Thus, the cost of borrowing in the economy will increase, and the money supply will decrease.
What is a monetary policy quizlet?
Monetary Policy. A macroeconomic policy enacted by the central bank that involves the management of money supply and interest rates. This policy is often used to stimulate growth, control inflation and manage exchange rates.
What are examples of fiscal policy? There are several examples of fiscal policy. Some of them include tax reduction and increased government spending (expansionary), tax increases and reduced government pay or jobs (contractionary), and changing interest rates (monetary).

Money obtained readily, with little effort and, often, illegally. For example, Winning the lottery—that's easy money! or I was wary of making easy money with the insider tips I'd been given .
What Is Easy Money? Easy money, in academic terms, denotes a condition in the money supply and monetary policy where the U.S. Federal Reserve (Fed) allows cash to build up within the banking system. This lowers interest rates and makes it easier for banks and lenders to loan money to the population.
Some people want to make money to support themselves and their family. Others want to make money to travel or to retire early. And still others want to make money to give back to their community or to help others in need. Whatever the reason, there are a number of ways to make money fast.
Key Takeaways. Money is a medium of exchange. It allows people and businesses to obtain what they need to live and thrive. Bartering was one way that people exchanged goods for other goods before money was created. Like gold and other precious metals, money has worth because it represents something valuable.
- Fiat money – the notes and coins backed by a government.
- Commodity money – a good that has an agreed value.
- Fiduciary money – money that takes its value from a trust or promise of payment.
- Commercial bank money – credit and loans used in the banking system.
To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange. Modern economies use fiat money-money that is neither a commodity nor represented or "backed" by a commodity.
a policy by a country's central bank of reducing interest rates to make money cheaper to borrow: The central bank has employed an easy monetary policy to help nurse the economy back to health.
Examples of money in a Sentence
The town is raising money for the elementary school. Friends would always ask her for money. It's an interesting idea, but there's no money in it: it'll never sell. He made his money in the insurance business.
How is the discount rate used as part of an easy money policy?
The Fed uses the discount rate to manage economic cycles. If the economy is sluggish or needs a boost, the Fed will lower the discount, rate-making access to credit and cash cheaper. Banks will increase their reserves, which means they have more money to lend, putting it into the stream of commerce.
Portability: Money must be easily moved around. Large or bulky items, such as boulders or heavy gold bars, cannot be transported easily from place to place.
A store of value is an asset that maintains its value, rather than depreciating. Gold and other precious metals are good stores of value because their shelf lives are essentially perpetual. A nation's currency must be a reasonable store of value for its economy to function smoothly.
If a money is not sufficiently portable, it will not be used by enough individuals to support an economy and will quickly be replaced. While gold fulfilled many of the necessary traits of money, its poor portability hindered its use and ultimately led to its centralization in the hands of banks.
It is also the case that ultra easy monetary policies can eventually threaten the health of financial institutions and the functioning of financial markets, threaten the “independence” of central banks, and can encourage imprudent behavior on the part of governments. None of these unintended consequences is desirable.