Central banks have some important tools to help control the economy. Here are the main ones:
Interest Rates: Central banks change the main interest rates to affect how much people borrow and spend. When they lower the rates, it makes borrowing cheaper. This can help the economy grow. On the other hand, higher rates make borrowing more expensive, which can slow things down.
Open Market Operations: This means they buy or sell government bonds. By doing this, they help control how much money is available in the economy.
Reserve Requirements: This tool changes how much money banks must keep on hand. When banks have to keep less money in reserve, they can lend out more.
All these tools work together to help keep things like inflation and job rates stable!
Central banks have some important tools to help control the economy. Here are the main ones:
Interest Rates: Central banks change the main interest rates to affect how much people borrow and spend. When they lower the rates, it makes borrowing cheaper. This can help the economy grow. On the other hand, higher rates make borrowing more expensive, which can slow things down.
Open Market Operations: This means they buy or sell government bonds. By doing this, they help control how much money is available in the economy.
Reserve Requirements: This tool changes how much money banks must keep on hand. When banks have to keep less money in reserve, they can lend out more.
All these tools work together to help keep things like inflation and job rates stable!