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relate overnight rate with money supplywhen the overnight interest rate decreases the money supply increaseswhen the overnight interest rate
determine about the inflation rate for many central banks this is the variable they are mostly interested in controlling for all central banks it is
what is money supplythe monetary base is only a small part of the total money supply but through the multiplier effect the central banks control over
enumerate the statement- interest rates with longer maturity since loans with longer maturities are substitutes for overnight loans the central bank
central bank and monetary policyby monetary policy we mean the policy directed at controlling the money supply and the interest rates in most
what are the central bank overnight interest ratesthe overnight interest rate is an important interest rate for a central bank and it has methods of
state the market for overnight loansovernight interest rates are rates for loans over a single night - these are the shortest of all interest rates
state about the other interest ratesthere are many other interest rates in a society for example you will earn interest when you deposit money in a
determine what is the yield curvethe yield curve is a graph of interest rates of different maturity recalculated to yearly rates at a particular
how rates depends on maturityrates depending on maturity even though rates with different maturity all recalculated to a yearly rate need not be
calculating interest rates on a yearly basisif the maturity is different from one year the interest rate is usually recalculated to a corresponding
relationship between the interest rate and the bond pricenote that the higher the issue price the lower the interest rate in the same way when the
state about the unitesd state government bondsin most countries you find government bonds with longer maturity for example in the united states you
what is treasury billsin most countries you will find many types of government bonds an important distinction is the duration of the bond that is the
what are the market interest ratesthe most important interest rates from a macroeconomic perspective are interest rates that the government pays on
determine about the interest ratesthe interest rate may be fixed or floating if it is fixed you will pay the same percentage for the entire duration
give brief introduction about interest ratewhen you borrow money you usually have to pay a fee for the loan this fee is often called interest
explain the multiplier effect with exampledeposits and loans in banks give rise to an important multiplier effect we use a simple example to
how much money can banks create does this mean that banks can create an unlimited amount of money the answer is no - that would require them to lend
give example of commercial banks how they create moneyfor example the borrower uses the money to buy an apartment the funds are transferred to the
how commercial banks create moneycommercial banks obviously cannot influence the amount of currency in the economy or the monetary base since they
determine the example of currency inside banks is not moneyan example may also illustrate this important fact eric has 100 euro - this amount is
illustrate the statement - currency inside banks is not moneythe fact that currency inside commercial banks is not money may strike you as odd but it
relate central banks with commercial banksin many countries the central bank imposes reserve requirements this means that commercial banks are
define the monopoly of central banksthe central bank has a monopoly on issuing currency it is in complete control of the monetary base in section 742