economic growth

An increase in the nation’s capacity to produce goods and services.

economic shocks

Events that impact the economy, come from outside it, and are unexpected and unpredictable (e.g., Hurricane Andrew in 1991, the rise in oil prices by OPEC).

Edge Act corporation

Corporation chartered by the Federal Reserve to engage in international banking. The Board of Governors acts on applications to establish Edge Act corporations and also examines the corporations and their subsidiaries. Named after Senator Walter Edge of New Jersey, who sponsored the original legislation to permit formation of such organizations. See also agreement corporation.

electronic funds transfer – EFT

Transfer of funds electronically rather than by check or cash. The Federal Reserve’s Fedwire and automated clearinghouse services are EFT systems.

Electronic Fund Transfer Systems – EFTS

A variety of systems and technologies for transferring funds (money) electronically rather than by check. This includes Fedwire, automated clearinghouses (ACHs), and other automated systems.

employment rate

The percentage of the labor force that is employed. The employment rate is one of the economic indicators that economists examine to help understand the state of the economy. See also unemployment rate.

equilibrium real interest rate

The rate that would be consistent with the full employment of labor and industrial capacity, and with real GDP being at its long-run potential level. This rate is needed as a benchmark to judge whether a given real interest rate is expansionary or contractionary.


Deposits denominated in U.S. dollars at banks and other financial institutions outside the United States. Although this name originated because of the large amounts of such deposits held at banks in Western Europe, similar deposits in other parts of the world are also called Eurodollars.

excess reserves

Amount of reserves held by an institution in excess of its reserve requirement and required clearing balance. Also see reserves.

exchange rate

The price of a country’s currency in terms of another country’s currency.

Executive Committee

A decision-making body of the FRBSF comprised of a number of the Bank’s senior officers, the Committee and its six satellite committees were established in 1995 to replace the smaller, more centralized Management Committee. The revised committee structure was intended to decentralize decision-making and promote increased information-sharing and teambuilding Districtwide.

exempted security

A security that is exempted from most provisions of the securities laws, including the margin rules. Such securities include U.S. government and agency securities and municipal securities designated by the SEC.

expansionary fiscal policy

A policy to increase governmental spending and/or a decrease in taxes. See also fiscal policy.

expansionary monetary policy

A policy of the Federal Reserve System that is designed to expand the growth of money and credit in the economy. See also monetary policy.

expected rate of inflation

The public’s expectations for inflation. These expectations determine how large an effect a given policy action by the Fed will have on economic activity.