Central banks play a big role in our everyday lives, mainly through something called monetary policy. This affects us in several ways:
Interest Rates: Central banks can change interest rates, which are the costs of borrowing money. For example, if interest rates go up by 1%, someone with a 10.
Money Supply: Central banks use methods like open market operations to manage how much money is available in the economy. In 2020, the Federal Reserve, which is the central bank in the U.S., increased its money supply from 7 trillion. This was done to help the economy.
Inflation Control: Central banks try to keep inflation, which is the increase in prices, at about 2%. If inflation stays above this level for too long, it can reduce how much people can buy with their money. This affects our daily spending.
All of these actions help keep the economy stable and influence our personal financial choices.
Central banks play a big role in our everyday lives, mainly through something called monetary policy. This affects us in several ways:
Interest Rates: Central banks can change interest rates, which are the costs of borrowing money. For example, if interest rates go up by 1%, someone with a 10.
Money Supply: Central banks use methods like open market operations to manage how much money is available in the economy. In 2020, the Federal Reserve, which is the central bank in the U.S., increased its money supply from 7 trillion. This was done to help the economy.
Inflation Control: Central banks try to keep inflation, which is the increase in prices, at about 2%. If inflation stays above this level for too long, it can reduce how much people can buy with their money. This affects our daily spending.
All of these actions help keep the economy stable and influence our personal financial choices.