Overview
Central banks play a crucial role in managing a country's economy by controlling the money supply, setting interest rates, and ensuring financial stability. They use various tools, such as monetary policy and open market operations, to influence economic conditions and achieve their goals, including...
Key Terms
Example: The Federal Reserve uses monetary policy to influence economic growth.
Example: A higher interest rate can reduce borrowing and spending.
Example: Inflation can erode purchasing power over time.
Example: Central banks work to maintain financial stability during economic downturns.
Example: During the 2008 financial crisis, central banks acted as lenders of last resort.
Example: The Federal Reserve implemented quantitative easing to stimulate the economy post-2008.