what: monetary policy
- Define the money supply and monetary policy
- Describe the instruments of monetary policy (changes in the interest rate and the money supply) including how it can effect the foreign exchange rate market.
- Effects of monetary policy on government macroeconomic aims
- Analyse how monetary policy measures may be used by government to achieve its macroeconomic aims.
- What is defined as money?
- How does modern fractional banking operate?
- Why is a central bank often referred to as the lender of last resort?
What is money?
How does modern fractional banking operate?
Why is a central bank often referred to as the lender of last resort?
2. How can the size of the 'Money Supply' in the economy be altered through policy?
3. Who is responsible for deploying monetary policy?
i) Who has this role in the EU, USA, UK?
4. What impact will this have on the economy during different phases of the business cycle?
5. What is loose monetary policy and when is this used?
6. What is tight monetary policy and when is this used?
The only economic lever that Mr. Friedman would allow government to use was the one that controlled the supply of money - a monetarist view that had gone out of favor when he embraced it in the 1950s. He went on to record a signal achievement, predicting the unprecedented combination of rising unemployment and rising inflation that came to be called stagflation.