A bailout is an emergency action taken by the federal government to provide financial assistance to prevent the failure of a specific private or quasi-private entity. This assistance often comes in the form of loans, grants, or government purchase of an equity position.
Monetary policy refers to the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply, which in turn affects interest rates. It is a crucial tool for achieving economic objectives such as controlling inflation, managing employment levels, and maintaining financial market stability.
Systemic risk refers to the potential for a major disruption in the function of an entire market or financial system, as opposed to just one or a few individual entities. It cannot be mitigated by diversification and is also known as market risk.
