Measure of the U.S. money stock that consists of currency held by the public, travelers checks, demand deposits, and other checkable deposits including NOW (negotiable order of withdrawal) and ATS (automatic transfer service) account balances and share draft account balances at credit unions.


Measure of the U.S. money stock that consists of M1, certain overnight repurchase agreements and certain overnight Eurodollars, savings deposits (including money market deposit accounts), time deposits in amounts of less than $100,000, and balances in money market mutual funds (other than those restricted to institutional investors).


Measure of the U.S. money stock that consists of M2, time deposits of $100,000 or more at all depository institutions, term repurchase agreements in amounts of $100,000 or more, certain term Eurodollars, and balances in money market mutual funds restricted to institutional investors.


The study of economics in terms of whole systems with reference to general levels of output and income and to the interrelations among sectors of the economy. See also microeconomics.


With regard to securities, this term refers to a fractional amount of full value, or the equity outlay (down payment) required for an investment in securities purchased on credit.

margin stock

Any stock listed on a national securities exchange, any over-the-counter security approved by the SEC for trading in the national market system or appearing on the Board’s list of over-the-counter margin stock, and most mutual funds.

market interest rates

Rates of interest paid on deposits and other investments, determined by the interaction of the supply of and demand for funds in financial markets.

matched sale-purchase agreements

An agreement in which the Federal Reserve sells a security outright for immediate delivery to a dealer or foreign central bank, with an agreement to buy the security back on a specific date (usually within 7 days) at the same price. Matched sale-purchase agreements are the reverse of repurchase agreements and allow the Federal Reserve to withdraw reserves on a temporary basis.

member bank

Depository institution that is a member of the Federal Reserve System. All federally chartered banks are automatically members of the System. State-chartered banks are divided into those that are members of the System (state member banks) and those that are not (nonmember banks).


The study of economics in terms of individual areas of activity (as a firm, household, or prices). See also macroeconomics.

monetary aggregates

See money supply.

monetary base

Those assets that depository institutions can use to meet their legal reserve requirements. The monetary base consists of deposits (reserves) held by depository institutions at Federal Reserve Banks plus Treasury currency and coins outstanding.

Monetary Control Act of 1980 – MCA

An Act which requires that all banks and all institutions that accept deposits from the public make periodic reports to the Federal Reserve System. Starting in September 1981, the Fed charged banks for a range of services that it had provided free in the past, including check clearing, wire transfer of funds, and the use of automated clearinghouse facilities.

monetary policy

The regulation, by the Federal Reserve System, of the money supply in order to maximize production and employment and stabilize prices. See also contractionary monetary policy and expansionary monetary policy.


To convert assets into money.

money market

Figurative expression for the informal network of dealers and investors over which short-term debt securities are purchased and sold. Money market securities generally are highly liquid securities that mature in less than one year, typically in less than ninety days.

money market rates

See short-term interest rates.

money multiplier

The relationship between the monetary base and the money supply. The multiplier explains the money supply has expanded through the banking system by distribution of excess reserves.

money supply

The amount of money (coins, paper currency, and checking accounts) that is in circulation in the economy.

moral hazard

The risk that a party to a transaction has not entered into a contract in good faith, has provided misleading information about its assets, liabilities, or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles.


An international policy intended to free international trade from the restrictions of bilateralism. Multilateralism represents an effort to permit nations to specialize in production and exchange in accordance with the principle of comparative advantage.

mutual savings banks

Banks which accept deposits primarily from individuals and place a large portion of their funds into mortgage loans. These institutions are prominent in many of the northeastern states. Savings banks generally have broader asset and liability powers than savings and loan associations but narrower powers than commercial banks. Savings banks are authorized to offer checking-type accounts.