221. Describe what else can be used instead of money as a store of value

229. 230.Explain what nominal interest rate means.
The main instrument used by a central bank to achieve its goals is the interest rate – also known as the discount rate or base rate. This is the rate at which the central bank is ready to lend to commercial banks. Let us look at how a rise in the discount rate affects the banking system and the financial markets.
A rise in the discount rate makes it more costly for commercial banks to borrow from the central bank. As we have just discussed, banks may wish to borrow if they feel that their level of reserves is too low. If the cost of borrowing from the central bank goes up, commercial banks are less inclined to borrow from it. Since borrowing from the central bank is also a source of bank reserves, an
increase in the interest rate and subsequent reduction in borrowing from the central bank puts the commercial banks in a situation where they have less reserves than they planned to hold.

231. Explain what business cycle means.
Business cycles are a type of fluctuation found in the aggregate economic activity of nations…a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions…this sequence of changes is recurrent but not periodic.
In essence, business cycles are marked by the alternation of the phases of expansion and contraction in aggregate economic activity, and the comovement among economic variables in each phase of the cycle. Aggregate economic activity is represented by not only real (i.e., inflation-adjusted) GDP—a measure of aggregate output—but also the aggregate measures of industrial production, employment, income, and sales, which are the key coincident economic indicators used for the official determination of U.S. business cycle peak and trough dates. A popular misconception is that a recession is defined simply as two consecutive quarters of decline in real GDP. Notably, the 1960–61 and 2001 recessions did not include two successive quarterly declines in real GDP.