The Tools of Monetary Policy

This video lesson graphically presents the three tools Central Banks have at their disposal for managing the level of aggregate demand in the economy. Through increasing or decreasing the money supply, a central bank has influence over the interest rates in a nation, and therefore over the level of investment and consumption among firms and households. To accomplish this, three tools are employed: The reserve requirement, the open market purchase or sale of government bonds, and the discount rate. This lesson illustrates these three tools and explains the relative importance of each to monetary policy makers.
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23 Responses to “The Tools of Monetary Policy” Subscribe

  1. Constanza Avila January 6, 2013 at 8:20 pm #


  2. Ladybb bushido January 6, 2013 at 8:59 pm #

    The video is very informative and now I can relate it to my countrys central bank role and its effects on the economy. I used to watch the news regarding the central bank but never have I understood whatever they are saying. Now I get the whole idea of the commercial banks and the household. This knowledge shared will greatly help me become very informative about my country. Thank You so much.

  3. Ladybb bushido January 6, 2013 at 9:46 pm #

    Oh good so that makes two of us…….bula

  4. mokat0071 January 6, 2013 at 10:34 pm #

    My final exam is today. Your video’s are great.

  5. Jary Ng January 6, 2013 at 11:04 pm #

    10q so much :) 

  6. 9nytuber January 7, 2013 at 12:02 am #

    Thank you sooooooooooooooo much for this. Had watched so many videos on this topic but just didn’t get it till I watched this one. Thanks!

  7. honesthua January 7, 2013 at 12:08 am #

    A very effective lesson here! However, I’m curious to know if the Federal Funds Rate (interest rate for inter-bank lending/borrowing of excess funds stored at the Fed) affect the setting of Interest Rates?

  8. John Amaya January 7, 2013 at 12:21 am #

    Thank You!!!! It was an excellent explanation of MP ! Now I am rdy for my exam and pass my class lol :P

  9. sha370z January 7, 2013 at 12:23 am #

    the fed loan over 16 trillion and more

  10. Bui Minh January 7, 2013 at 1:19 am #

    it’s quite easy to understand, thanks a lot:)

  11. TrAx3152 January 7, 2013 at 1:19 am #

    Appreciate this. From the Fiji Islands in the South Pacific.

  12. sriram senthil January 7, 2013 at 2:04 am #

    really helped a lot. thank you jason

  13. Tsandnami January 7, 2013 at 2:17 am #

    this video just saved my grade! thank you so much! i can’t express how appreciative i am.

  14. ks455a January 7, 2013 at 2:48 am #

    Awesome video! Helped me pull of an A on my test! Thanks:)

  15. Gary Hudson January 7, 2013 at 3:15 am #

    this was a brilliant lecture and really helped. Big Thanks.

  16. Pris Ka January 7, 2013 at 4:00 am #

    Great video! but which lesson is next?

  17. dylanmilstein January 7, 2013 at 4:48 am #

    yo, great video. saving my butt for finals

  18. chikavin January 7, 2013 at 4:54 am #

    Thanks, your video helped me a lot.

  19. wyattcompagna January 7, 2013 at 5:01 am #

    Awesome video! Thanks. :D

  20. Slavena Petrova January 7, 2013 at 5:05 am #

    Great video! Thanks.

  21. ash coast January 7, 2013 at 5:20 am #

    thanks 4 uploading and sharing ds lecture…it helped me alot for preparing my presentation

  22. D0mantas January 7, 2013 at 5:43 am #

    Thanks, helps a lot!

  23. Saurabh Singhal January 7, 2013 at 6:25 am #

    Well explained video !!

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