Monetary Policy

Carried out by the central bank and involves the control of money supply and interest rates to influence aggregate demand and subsequently fulfill macroeconomic objectives

Monetary Policy

Carried out by the central bank and involves the control of money supply and interest rates to influence aggregate demand and subsequently fulfill macroeconomic objectives

Central Bank

The monetary authority responsible for an economy’s monetary policy and financial system regulation.

Central Bank

The monetary authority responsible for an economy’s monetary policy and financial system regulation.

Interest Rates

The cost of borrowing and reward for saving of money, expressed as a percentage.

Interest Rates

The cost of borrowing and reward for saving of money, expressed as a percentage.

Money Supply

The amount of money circulating in the economy, which includes notes and coins, loans, credits and deposits.

Money Supply

The amount of money circulating in the economy, which includes notes and coins, loans, credits and deposits.

Demand-side Policy

Government policy that aims to influence the level of AD of the economy.

Demand-side Policy

Government policy that aims to influence the level of AD of the economy.

Inflation Target (Goals of Monetary Policy)

the practice of using monetary policy to achieve a predetermined level of inflation. By increasing the transparency of the central bank and controlling inflation, this would create a stable economic environment for consumers and producers.

Inflation Target (Goals of Monetary Policy)

the practice of using monetary policy to achieve a predetermined level of inflation. By increasing the transparency of the central bank and controlling inflation, this would create a stable economic environment for consumers and producers.

Low Unemployment (Goals of Monetary Policy)

The central bank may stimulate the economy by reducing interest rates. This reduces the cost of borrowing for firms and households, encouraging investment and consumption.

Low Unemployment (Goals of Monetary Policy)

The central bank may stimulate the economy by reducing interest rates. This reduces the cost of borrowing for firms and households, encouraging investment and consumption.

Reduce Business Cycle Fluctuations (Goals of Monetary Policy)

Monetary policy is used to influence the level of economic activity. At times of an economic downturn, interest rates are lowered to stimulate the economy. When the economy is booming, interest rates are raised to lower inflationary pressure.

Reduce Business Cycle Fluctuations (Goals of Monetary Policy)

Monetary policy is used to influence the level of economic activity. At times of an economic downturn, interest rates are lowered to stimulate the economy. When the economy is booming, interest rates are raised to lower inflationary pressure.